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Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0095.
- Add a stop-loss at 0.9980.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 0.9900.
- Add a stop-loss at 1.0050.
The EUR/USD price surged above the parity level on Monday as the market reacted to the relatively strong German industrial production data. It rose to a high of 1.0036, the highest point since October 27. It has bounced back by about 5% from its lowest level this year.
Germany industrial production
The EUR/USD pair continued its bullish momentum after the latest German industrial production data. According to Destatis, industrial output expanded by 0.6% in September, higher than the median estimate of 0.2%.
Production rose in September even as energy prices remained at an elevated level. Data published last month showed that consumer and producer price index surged by double digits in September.
Still, there are some positive signs for the European economy. For example, natural gas prices continued their freefall as mild weather kept a lid on heating demand. Gas futures declined by as much as 8.1% to the lowest level in more than a week.
Gas prices have also dropped because of the rising gas storage in most European countries. In Germany, gas stockpiles has risen to about 99%. Therefore, companies and households are expected to see lower prices and more activity during the holiday season.
The EUR/USD pair also rebounded as investors wait for the outcome of the mid-term elections in the US. Polling data shows that Republicans have a higher chance of flipping the House of Representatives. The Senate could go to either of the parties.
As such, it means that Washington will be under an intense deadlock. In most cases, investors favor a deadlock, which explains why American stocks rallied on Monday.
The only data scheduled for Tuesday is the upcoming European retail sales numbers. Economists expect the data to show that retail sales dropped by 1.3% in September after falling by 2.0% in August.
EUR/USD forecast
The EUR/USD pair has been in a strong bullish trend in the past few days. As it rose, the pair managed to move above the important resistance level at 1.000. It also rose above the Ichimoku cloud and the 25-day and 50-day moving averages.
The pair is now approaching the first resistance of the standard pivot point. Therefore, the EUR/USD price will likely continue rising as buyers target the next key resistance at 1.0095, the highest point on October 27.
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