Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0810.
- Add a stop-loss at 1.0700.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0710 and a take-profit at 1.0675.
- Add a stop-loss at 1.0825.
The EUR/USD exchange rate wavered in the overnight session as America’s bond yields drifted upwards. After rising to a high of 1.0756 on Monday, the pair retreated to 1.0732. It is hovering near the highest level since September 5th.
US bond yields rise
The EUR/USD pair has been in a strong uptrend recently, helped by the falling bond yields. This retreat ended on Monday as the 10-year bond yield rose to 4.65% while the 30-year rose to 4.77%.
US bond yields rose after the price of Brent and West Texas Intermediate (WTI) rose to $86.12 and $82. Oil rose after Russia and OPEC+ members signaled that they would maintain their supply cuts. Higher oil prices mean that inflation could remain stubbornly high in the coming months.
The EUR/USD pair has risen after the latest European Central Bank (ECB) and the Federal Reserve decisions. The ECB decided to leave interest rates unchanged for the first time in eleven meetings.
Similarly, the Federal Reserve left rates unchanged between 5.25% and 5.50% in its meeting last week. It also left the door open for another rate hike in its December meeting. However, most analysts believe that the Fed will leave interest rates unchanged in the foreseeable future.
There will be no major economic data from Europe and the United States. In Europe, Germany will publish the latest industrial production data. Economists expect the data to show that production dropped by 0.1% in September.
Germany, the biggest economy in Europe, has moved into a recession as demand, consumer, and business confidence worsened. The other important European data to watch will be the latest European Producer Price Index (PPI) numbers.
Meanwhile, in the United States, the Commerce Department will release the latest trade numbers. In the past, however, these numbers tend to have no impact on the EUR/USD pair.
EUR/USD technical analysis
The EUR/USD pair has been in a strong bullish trend in the past few days. It moved to a high of 1.0750, the first resistance of the Fibonacci pivot point. This price was also at the 38.2% Fibonacci Retracement point.
The pair rose above the 50-period and 25-period moving averages. It has also jumped above the resistance level at 1.0691, the highest point on October 24th. Therefore, the pair will likely continue rising as buyers target the second resistance at 1.0810.
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