Bearish View
Set a sell-stop at 1.1528 and a take-profit at 1.1400.
Add a stop-loss at 1.1600.
Timeline: 1-2 days.
Bullish View
Set a buy-stop at 1.1600 and a take-profit at 1.1700.
Add a stop-loss at 1.1500.
The EUR/USD struggled to find direction on Monday morning as investors reflected the latest Fed interest rate decision and the relatively strong American jobs data. The pair is trading at 1.1570, which is slightly above last Friday’s low of 1.1513.
US Inflation Data Ahead
The EUR/USD was relatively volatile last week as investors reflected on the Federal Reserve decision and the positive US jobs numbers. On Wednesday, the Federal Reserve decided to leave interest rates unchanged between 0% and 0.25%.
The bank also made its first step to unwind its large easing program. It decided to start tapering its $120 billion per month decision. It did that by cutting its asset purchase program by about $15 billion per month.
On Friday, the US published the best jobs numbers in three months. The economy added more than 500k jobs in October, which was better than the adjusted October additions of more than 312k jobs. The unemployment rate also decline to a pandemic era low of 4.6%.
Therefore, these numbers reinforced the fact that the American economy is doing relatively well and that the Fed will continue tightening.
The next key mover for the EUR/USD will be the latest American inflation numbers that will come out on Wednesday. The numbers are expected to show that the country’s consumer inflation continued soaring in October. Precisely, analysts expect that the headline Consumer Price Index (CPI) rose to a multi-year high of 5.8%. Still, the Fed expects that inflation will start to moderate in the coming year.
There will be no key economic data from the US and the EU today. Therefore, investors will keep focusing on last week’s jobs numbers.
EUR/USD Forecast
The EUR/USD pair declined to a multi-month low of 1.1513 last week. By so doing, the pair managed to decline below the key support of 1.1528. This was an important support because the pair struggled to move below that level two times in October and November.
The EUR/USD pair is still below the 25-day and 50-day moving averages even after the strong rally that it formed on Friday. The Relative Strength Index (RSI) also moved to the neutral level of 48.
Therefore, there is a likelihood that the pair will likely resume the downward trend as bears attempt to move below the support at 1.1500.
