Bullish view
- Set a buy-stop at 1.1015 and a take-profit at 1.1138.
- Add a stop-loss at 1.0850.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0900 and a take-profit at 1.0800.
- Add a stop-loss at 1.1120.
The EUR/USD exchange rate dropped as the US dollar index and bond yields bounced back. The pair pulled back to a low of 1.0945, which was much lower than last Friday’s high of 1.1138.
FOMC minutes ahead
The EUR/USD retreated as global risks continued rising this week. On Tuesday, Maersk, the giant Danish shipping giant, announced that it would pause transit through the Red Sea until further notice. Other shipping companies like MSC and Hapag-Lloyd have also paused using the route.
Ships have come under intense attacks recently by Houthi rebels, who are protesting the ongoing war in Gaza. Therefore, with Iran and the US now involved in the region, there are risks that the crisis will escalate further.
As a result, there are risks that inflation will start rising in most countries. In fact, the price of crude oil has risen to over $77 and there is a possibility that it could keep moving higher in the coming days. Shipping costs are also rising.
The EUR/USD pair will be in the spotlight on Wednesday as traders reflect on several economic numbers from the US and Europe. In Europe, the key data to watch will be the upcoming German unemployment numbers. Economists expect the data to show that the country’s unemployment rate remained at 5.3%.
In the US, the Bureau of Labor Statistics will publish the latest JOLTs job openings numbers. Economists expect the numbers to reveal that the number of job vacancies rose to 8.85 million in November. This report will come two days before the agency reports December’s non-farm payrolls (NFP) data.
Meanwhile, the Federal Reserve will publish minutes of the last meeting during the American session. These minutes will provide more information about what the committee deliberated in the last meeting.
EUR/USD technical analysis
The EUR/USD pair pulled back as US bond yields bounced back. It retreated below the key support at 1.1017, its highest level on November 29th. The Relative Strength Index (RSI) has dropped to the neutral point at 50. Also, it remains above the 50-period Exponential Moving Average.
The EUR/USD pair is also above the ascending trendline, which connects the lowest levels since October 3rd. Therefore, the pair will likely resume the uptrend as bulls attempt to retest last week’s high at 1.1138.
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