Bearish view
- Sell the EUR/USD and set a take-profit at 0.9900.
- Add a stop-loss at 1.0100.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0095 and a take-profit at 1.0020.
- Add a stop-loss at 0.9950.
The EUR/USD price tilted upwards after the latest European consumer inflation data. The pair rose to a high of 1.0073, which was slightly above last month’s low of 0.9900.
Manufacturing PMI and US jobs
The EUR/USD price held steady after the European Union published worrying economic numbers from Europe. According to Eurostat, the bloc’s consumer price index (CPI) rose from 0.1% to 0.5% in August. This increase translated to a year-on-year gain of 9.1%, which was the highest reading on record.
Core inflation, which excludes volatile food and energy products, rose from 0.1% to 0.5%. It rose from 4.0% to 4.3% on a year-on-year basis. These numbers are significantly higher than the ECB’s target of 2.0%. In addition, inflation in the bloc is substantially higher than the reported numbers since European governments have unveiled subsidies to cushion their citizens.
At the same time, inflation will likely keep rising now that Russia has cut natural gas supplies to the bloc for three days. In a statement, the government’s spokesperson blamed sanctions for the lack of parts that are needed to pump gas.
There are concerns that Russia will not restart supplies considering that tensions are rising. On Wednesday, the European Union said that it will suspend a visa facilitation deal with Moscow in a bid to reduce the number of Russian citizens in the bloc.
The EUR/USD also rose even after Fed’s Loretta Mester reiterated that the Fed will likely hike interest rates to 4% by early next year. She also hinted that the bank will not cut interest rates in 2023.
The next key catalyst for the pair will be the latest EU and US manufacturing and services PMI numbers that will come out later today. They will be followed by the closely watched US non-farm payrolls (NFP) data.
EUR/USD forecast
The EUR/USD pair continued consolidating ahead of the upcoming US non-farm payrolls (NFP) data. It is hovering near the parity level and is slightly above the 25-day and 50-day moving averages. The pair’s Relative Strength Index (RSI) has been in an upward trend.
It has formed an inverted cup and handle pattern. Indeed, the current consolidation is part of the handle section. Therefore, the outlook for the pair is still bearish, with the next key support being at 0.9900.
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