Bearish view
- Sell the EUR/USD and set a take-profit at 0.9850.
- Add a stop-loss at 1.010.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.010 and a take-profit at 1.020.
- Add a stop-loss at 0.9950.
The EUR/USD price moved sideways in the overnight session even after the relatively divergent economic data from the EU and the US. It is trading at the parity level of 1.000, where it has been in the past few days.
EU and US confidence divergence
Consumer spending is the most important part of the American and European economies. Therefore, investors and policymakers always pay a close attention to consumer confidence data.
On Tuesday, data from Europe showed that the bloc’s consumer confidence dropped to -24.9 in August. The industrial and services PMI data also declined as companies continued fighting inflation.
In the same period, in the United States, data by Conference Board showed that the country’s confidence rose for the first time in three months. It rose from 95.3 in July to 103.2 in August. Economists were expecting the data to show that the country’s confidence rose to 97.9.
Additional data showed that the European economy is struggling. For example, in Germany, the bloc’s biggest economy, inflation rose to a 40-year high of 7.9% in August. Inflation is substantially higher than reported since Germany has unveiled some subsidies, which are expected to end soon.
The next key catalyst for the EUR/USD will be the preliminary inflation data from France, Italy, and the European Union. Analysts expect the data to show that the headline CPI rose from 8.9% to 9.0% in August. They expect that core inflation rose to 4.0%.
Similarly, in France and Spain, they expect that headline inflation rose to 6.1% and 8.1%, respectively. The other important data will be the latest German unemployment rate. With the cost of doing business rising, analysts believe that the unemployment rate rose to 5.5%.
EUR/USD Forecast
The EUR/USD pair moved sideways on Wednesday morning. It was trading at the parity level of 1.000, which was slightly above this month’s low of 0.9900. It is hovering at the 25-day and 50-day moving averages while the MACD moved slightly above the neutral point.
The pair has also formed an inverted cup and handle pattern. The current consolidation is part of the handle section. It has also moved between the standard pivot point and the first resistance of the standard pivot point. The pair will likely continue falling as sellers target the next key support at 0.9850.
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