Bearish View
- Set a sell-stop at 1.0722 and a take-profit at 1.0650.
- Add a stop-loss at 1.0825.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0755 and a take-profit at 1.0840.
- Add a stop-loss at 1.0685.
The EUR/USD wavered slightly after the relatively weak minor economic numbers from Europe confirmed that the US was doing much better. The pair remained at 1.0750 on Tuesday and Wednesday morning.
Federal Reserve statements
The biggest theme in the forex market this week was a ‘60 minutes’ interview with Jerome Powell, the head of the Federal Reserve. In it, he reiterated what he said after the Fed delivered its first interest rate decision of the year last week.
The Fed, as previously guided, left rates unchanged between 5.25% and 5.50%. In his press conference, Powell noted that it was still too early to predict a March rate cut. He reiterated the same view in the interview even as he warned about the US fiscal health.
This view has also been emphasized by other Federal Reserve officials like Neel Kashkari and Loretta Mester who argued that it was too early to cut rates.
Economic numbers are also confirming this view since they show that the economy is still strong. For example, the latest NFP numbers revealed that the economy added over 350k jobs in January as wage growth accelerated.
Therefore, a combination of a crisis at the Middle East, high wages, and shipping costs mean that inflation will likely remain at an elevated level. As such, the Fed is in no hurry to cut rates in such a situation.
The EUR/USD pair also wavered after Europe published weak retail sales data. According to Eurostat, retail sales dropped by 1.1% in December after rising by 0.3% in the previous month. Economists were expecting the data to show that sales dropped by 0.9%.
Other reports showed that the construction PMI dropped to 41.3 while consumer confidence in some countries is still weak.
EUR/USD technical analysis
The EUR/USD wavered after hitting the key support level at 1.0722, its lowest swing in December. It is normal for an asset to waver after falling to an important support or hitting a key resistance point. The pair’s Average Directional Index (ADX) has risen to 27, signaling that the downward trend is still strong.
Further, the MACD indicator has moved below the neutral point while it is below the Ichimoku cloud. Therefore, in this case, the path of the least resistance for the pair is downwards, with the next point to watch being at 1.0650.
Ready to trade our Forex daily forecast? We’ve shortlisted the best FX trading platform in the industry for you.