Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0800.
- Add a stop-loss at 1.0650.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0695 and a take-profit at 1.0600.
- Add a stop-loss at 1.0765.
The EUR/USD exchange rate continued rising as bond yields and crude oil continued retreating. The pair rose to a multi-week high of 1.0730, which was over 2.70% above the lowest point this year.
Bond yields and crude oil retreats
The EUR/USD pair continued rising as the US dollar index retreated. The index, which tracks the performance of the greenback against other currencies, dropped to $105, down from the year-to-date high of $107.
Further, the price of crude oil continued falling. Brent, the global benchmark, dropped to $85.23 while the West Texas Intermediate (WTI) fell to $80.89. The falling price of crude oil is a welcome move because of its important role in influencing inflation.
Therefore, investors believe that American consumer inflation continued dropping in October. At the same time, America’s bond yields dropped to the lowest point in weeks. The 10-year yield dropped to 4.57% while the 30-year fell to 4.77%.
Bond yields and the US dollar dropped after the Federal Reserve delivered its interest rate decision. The bank left interest rates unchanged between 5.25% and 5.50% and hinted that it would maintain its data dependence.
Economic data published on Friday showed that the economy’s labor market was cooling. The economy added 150k jobs in October while the unemployment rate jumped to 3.9%. Also, the participation rate dropped slightly to 62.70%.
Therefore, with the labor market and inflation cooling, analysts believe that the Federal Reserve has done hiking interest rates.
The same is true with the European Central Bank (ECB), which decided to leave rates unchanged at a two-decade high. Economic data published last week showed that the bloc’s consumer inflation rate dropped to 2.9% in October while the GDP contracted in the third quarter.
EUR/USD technical analysis
The EUR/USD exchange rate made a bullish breakout as the US dollar index slipped. It has jumped to a high of 1.0730, which is much higher than last month’s low of 1.0406. The pair also moved above the upper side of the ascending channel. It has also jumped above the crucial resistance point at 1.0695, the highest point on October 24th.
The pair has also jumped above the 25-period and 50-period moving verages while the Relative Strength Index (RSI) is nearing the overbought point. It is also approaching the second resistance of the Woodie pivot point. Therefore, the pair will likely continue rising as buyers target the next psychological level at 1.0800.
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