Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0720.
- Add a stop-loss at 1.0850.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0820 and a take-profit at 1.0920.
- Add a stop-loss at 1.0720.
The EUR/USD pair reacted mildly to the latest US consumer inflation numbers. It was trading at 1.0791 on Wednesday morning, a few pips above this week’s low of 1.0722. Focus now shifts to the upcoming Federal Reserve and European Central Bank (ECB) decisions.
Fed and ECB decisions
The US published relatively cool consumer inflation numbers on Tuesday that largely met analysts expectations. According to the Bureau of Labor Statistics (BLS), the headline Consumer Price Index (CPI) rose from 0.0% in October to 0.1% in November.
This increase translated to a YoY growth of 3.1%, which was in line with expectations. It was just a point lower than October’s 3.25. Inflation dropped as the prices of gasoline and other durable goods items pulled back.
Core inflation rose from 0.2% in October to 0.3% leading to a YoY increase of 4.0%. These numbers, coupled with the strong non-farm payrolls (NFP) data mean that the Federal Reserve will likely push back against interest rate cuts expectations.
Traders have also started to position for lower rate cuts than expected. Data in the swap market shows that traders expect about 108 basis point rate cuts in 2024,, with the first one coming in May.
The next important EUR/USD news will be the upcoming FOMC decision. In it, the bank is expected to maintain rates between 5.25% and 5.50% as it did in its last meeting in November.
The other crucial event will be the upcoming ECB decision scheduled for Thursday. The ECB is in a better place than the Federal Reserve since the bloc’s inflation has dropped to 2.4%, slightly above its target of 2.0%.
Also, the bloc’s economy is also not doing well, with the most recent data showing that the GDP contracted in the third quarter.
EUR/USD technical analysis
The EUR/USD pair has moved sideways in the past few days. On the 4H chart, the pair has remained slightly below the 38.2% Fibonacci Retracement level. It has also remained slightly below the 50-period Exponential Moving Average (EMA).
The pair is also hovering at the Woodie pivot point while the two lines of the MACD have pointed upwards. They remain below the neutral line. Therefore, the pair will likely resume the bearish trend, with the key level to watch being this week’s low of 1.0723. This price is also along the 50% retracement point.
Ready to trade our free trading signals? We’ve made a list of the top 10 forex brokers in the world for you to check out.