Bearish View
- Sell the EUR/USD pair and set a take-profit at 1.0880.
- Add a stop-loss at 1.09600.
- Timeline: 1-2 days.
Bullish View
- Buy the EUR/USD pair and set a take-profit at 1.0962.
- Add a stop-loss at 1.0880.
The EUR/USD exchange rate remained in a consolidation mode as traders waited for the upcoming US inflation data. It was trading at 1.0925, where it has been in the past few days. This price is a few points below last week’s of 1.1000.
US Inflation Data Ahead
The EUR/USD pair reacted mildly to several important economic numbers from Europe and the United States. On Tuesday, data from Germany revealed that the woes in its industrial base worsened in November. Industrial production dropped by 0.7% in November, leading to a YoY retreat of 4.87%.
Another report showed that Europe’s unemployment rate made a modest improvement in November. It dropped from 6.5% in October to 6.4%, which is a positive sign about the labor market.
The other notable numbers came from the United States. According to the Commerce Department, the country’s exports dropped from $258 billion in October to $253 billion in November. Exports also retreated to $316 billion, leading to a trade deficit of over $63 billion.
Meanwhile, the Atlanta Federal Reserve estimates that the US economy expanded by 2.2% in Q4 after expanding by 5.2% in Q3. The latest estimate was lower than the median estimate of 2.5%. The US will publish the official reading of Q4 GDP later this month.
These economic numbers failed to move the EUR/USD pair because traders were focusing on the most important report of the month. The US will release December’s inflation data on Thursday. Traders will use this report to estimate the next Fed action.
There will be no major economic event on Wednesday. The only key one will be the upcoming statement by John Williams, the head of the New York Fed. In his previous statement, Williams warned that rates could stay restrictive for a while.
EUR/USD Technical Analysis
The EUR/USD pair has remained in a tight range in the past few days after it plunged last week. As a result, the pair has moved below the 50-period moving average and the Woodie pivot point. It has also remained between the lower and middle lines of the Andrews pitchfork tool.
Most importantly, the pair has formed a bearish flag pattern. Therefore, the pair will likely remain in this range on Wednesday and then have a bearish breakout ahead or after the upcoming US inflation report. The next target will be at 1.08500, the first support of the Woodie pivot.
Ready to trade our free Forex signals? Here are the best Forex brokers to choose from.