Bearish view
- Sell the EUR/USD pair and set a take-profit at 0.9957.
- Add a stop-loss at 1.0163.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0150 and a take-profit at 1.0250.
- Add a stop-loss at 1.000.
The EUR/USD price continued falling as concerns of a more hawkish Federal Reserve pushed the US dollar to a multi-week high. It also declined as risks in the financial market rose ahead of the Jackson Hole Symposium. It moved to a low of 1.0050, which was the lowest level since July 15.
US dollar makes a comeback
The EUR/USD downward trend accelerated after the Fed published minutes of its July meeting last week. In this meeting, the bank identified two potential risks in the market.
First, officials noted that inflation remains at uncomfortable levels and that it could get entrenched in the market. This meeting happened before the US published the recent inflation data that showed that the headline prices dropped from 9.1% to 8.7% in July.
Second, officials said that the bank should be cautious about hiking interest rates so soon. As a result, analysts believe that the Fed will continue hiking interest rates but at a relatively slow pace. Besides, last week’s housing data showed that the sector is weakening.
Meanwhile, the European economy is contending with numerous challenges. The most important challenge is on the bloc’s energy crisis since analysts expect that Russia will completely stop natural gas deliveries towards winter.
At the same time, Norway has warned that it could stop electricity exports because of low water levels in its hydroelectric power plants. Additionally, business is being hindered because of shrinking water levels in Europe. Many companies use rivers to ship important items like coal and auto parts.
There will be no economic events from the US and Europe on Monday. Therefore, investors will focus on the upcoming flash manufacturing and services PMIs that are scheduled for Tuesday. They will also be looking for this week’s Jackson Hole Symposium in Wyoming.
EUR/USD forecast
The EUR/USD pair continued its downward trend as the US dollar made a strong comeback. As it dropped, it managed to move below the important support at 1.0099, which was the lowest level on July 27.
The pair dropped below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) and the MACD continued trending lower. Therefore, the pair will likely continue falling as sellers target the mid-July low of 0.9957. A move above the resistance point at 1.0183 will invalidate the bearish view.
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