Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.100.
- Add a stop-loss at 1.0900.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0935 and a take-profit at 1.0875.
- Add a stop-loss at 1.1100.
The EUR/USD exchange rate continued rising on Wednesday, erasing all the losses that happened after the US published strong inflation numbers. The pair bounced back to 1.0963, which was a few points above this week’s low of 1.0900.
US retail sales data ahead
The EUR/USD rose slightly as traders waited for the upcoming US retail sales and Producer Price Index (PPI) data.
Economists polled by Reuters expect the numbers to show that the volume of retail sales rose by 0.8% in February after falling by -0.8% in January. The core retail sales, which excludes the volatile food and energy products, is expected to rise by 0.5% after falling by 0.6% in the previous month.
Retail sales are an important part of the economy because consumer spending is the biggest part of the economy.
The report will come two days after the US published strong inflation numbers. The data showed that the headline consumer price index (CPI) rose by 3.2% in February while core inflation rose to 3.8%.
A strong retail sales report will remove the incentive for the Federal Reserve to cut interest rates in the near term.
The other important US data scheduled for Thursday are the Producer Price Index (PPI) and initial jobless claims numbers. Economists expect the data to show that the headline and core PPI rose by 1.1% and 1.9%, respectively.
The EUR/USD pair also rebounded after the head of the French central bank, Francois Villeroy, said that the Fed would likely start cutting rates in Spring. This means that the bank could start slashing rates earlier than the Fed.
The ECB has more urgency to start cutting rates now that the bloc’s inflation is nearing the 2% target while the economy is not doing well.
EUR/USD technical analysis
The EUR/USD pair has bounced back after dropping to 1.0900 after the US published strong inflation numbers. It has now rebounded above the crucial resistance point at 1.0931, its highest point on January 24th. The pair has also moved above the Ichimoku cloud indicator.
It has also jumped above the 50-period Exponential Moving Average (EMA). The Relative Strength Index (RSI) has bounced back from the middle line of 50 to 63.
Therefore, more upside will be confirmed if the price moves above the important resistance at 1.0980, its highest point on Friday. A move above this price will invalidate the double-top pattern that has been forming.
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