Bearish view
- Set a sell-stop at 1.0795 and a take-profit at 1.0723.
- Add a stop-loss at 1.0900.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.08520 and a take-profit at 1.0910.
- Add a stop-loss at 1.08750.
The EUR/USD exchange rate continued its downward trend as the US dollar rallied. The pair retreated to a low of 1.0796 on Monday, its lowest point since December 13th. It has plunged hard from the year-to-date high of 1.1140.
Europe GDP and US consumer confidence data
The EUR/USD pair has continued its freefall ahead of the upcoming US consumer confidence and European GDP data. Economists polled by Reuters expect the data to show that the European economy contracted by 0.1% in Q4.
Eurostat will also publish the latest business and consumer confidence numbers. The consumer confidence report is expected to come in at minus 16.1 in January after falling by -15.1 in the previous month.
These numbers will come a few days after the European Central Bank (ECB) delivered its interest rate decision. In it, the bank decided to leave interest rates unchanged at a record high of 4.0%. Christine Lagarde, the ECB chair, said that the bank will hold rates higher for a while.
The next EUR/USD news will be the upcoming US consumer confidence report by the Conference Board. Economists polled by Reuters expect the data to show that the confidence report rose from 110 in December to 115 in January. It could come higher than that.
The US will also publish the latest JOLTs job openings numbers and the house price index (HPI) report. These numbers will come a day ahead of the upcoming Federal Reserve decision. Based on the recent statements by Fed officials, there is a high possibility that the bank will leave rates intact between 5.25% and 5.50%.
The other key reports scheduled for this week will be the upcoming US non-farm payrolls (NFP) report on Friday and Europe’s inflation data.
EUR/USD technical analysis
The EUR/USD exchange rate retreated to a multi-week low of 1.0796 on Monday and then formed a small hammer pattern on the 4H chart. It has constantly remained below the 50-period moving average and the Ichimoku cloud indicator. The Average Directional Index (ADX) has moved below 20, signaling that the downward trend is losing momentum.
Therefore, the pair will likely continue falling as sellers target the next key support point at 1.0723, its lowest swing on December 8th. The alternative scenario is where the pair rises and retests the 50-period moving average at 1.0870.
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