Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0890.
- Add a stop-loss at 1.0800.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0835 and a take-profit at 1.0780.
- Add a stop-loss at 1.0925.
The EUR/USD pair wavered after the relatively weak economic numbers from the United States. It remained at 1.0855, where it has been since Friday as focus now shifts to the upcoming US GDP and European confidence numbers.
Weak US economic data
The EUR/USD pair reacted mildly to a set of weak economic numbers on Tuesday. These numbers revealed that consumer confidence, durable goods orders, and housing numbers were worse than expected.
According to Conference Board, the country’s consumer confidence dropped from 110.9 in January to 106.7 in February. This figure was worse than the median estimate of 114.8 and was the lowest figure in months.
Another report showed that durable goods orders dropped by 0.3% MoM in January, worse than the expected increase of 0.2%. It declined by 6.1% on a YoY basis, also missing the consensus estimate of 4.9%.
The housing market is also starting to soften as the house price index rose by 0.1% in December, dropping from the previous month’s 0.4%.
These numbers, together with the weak retail sales and industrial production figures, will likely put more pressure on the Fed. The bank is at a crossroad with inflation remaining stubbornly above its 2% target as the economic slowdown continues.
Looking ahead, the next key EUR/USD news to watch will be the upcoming US GDP numbers. Based on the first estimate, economists expect the data to show that the economy expanded by 3.3% in Q4 after growing by 4.9% in the previous month.
The other important report will come from Europe, where Eurostat will publish the bloc’s consumer and business confidence numbers. Economists believe that the two figures remained in the negative zone as Europe goes through an economic weakness. Germany, the biggest economy in the bloc is already in a recession.
EUR/USD technical analysis
The EUR/USD pair has held steady this week even after the weak US consumer confidence report. It remains below the important resistance point at 1.0885, the highest swing on February 22nd. Additionally, there are signs that it has formed an inverse head and shoulders pattern while the 50-period and 100-period moving averages have made a bullish crossover.
The MACD indicator has remained above the zero line. Therefore, the pair will likely remain in this range on Wednesday. While the US GDP and European confidence numbers are important, their impact on the pair will be limited. The key support and resistance levels to watch will be at 1.0800 and 1.0900.
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