Economists expect that the European Central Bank will start slowing the pace of interest rate hikes in its meeting next week.
- Buy the EUR/USD pair and set a take-profit at 1.0710.
- Add a stop-loss at 1.0425.
- Timeline: 1-2 days.
- Set a sell-stop at 1.0450 and a take-profit at 1.0360.
- Add a stop-loss at 1.0630.
The EUR/USD price moved sideways after the second estimate of European GDP data. It was trading at 1.0513, which was a few pips above Tuesday’s low of 1.0441. The pair was about 8% above the lowest point in November.
European GDP data
The EUR/USD price sell-off moderated slightly after the European statistics agency published the second estimate of GDP data. According to Eurostat, the European economy grew by 0.3% in the third quarter, helped by robust consumer spending. On a year-on-year basis, the economy expanded by 2.3% after growing by 4.2%in Q2. It was better than the median estimate of 2.1%.
Additional data showed that the bloc’s employment change rose by 1.8%, slightly higher than the median estimate of 1.7%. Therefore, these numbers imply that the European economy’s contraction will be milder than expected.
Economists expect that the European Central Bank will start slowing the pace of interest rate hikes in its meeting next week. The bank has hiked by 0.75% in the past two meetings straight. Therefore, economists predict that the bank will hike by 0.50%. Perhaps, a speech planned by Christine Lagarde later on Thursday will provide more color about what to expect.
The EUR/USD pair wavered as American bond yields remained under pressure. Yields of the ten-year government bond dropped to 3.4% while the 5-year yield dropped to 3.4%. The spread between 10-year and 2-year yield dropped to the lowest level in years.
There will be no major economic data from the US today. The only important one will be the country’s initial and continuing jobless claims data. Economists expect the data to show that the number of initial jobless claims rose to 230k. These numbers will come a week after the stellar non-farm payrolls (NFP) data.
The EUR/USD price has been in a tight range in the past few days. It was trading at 1.0520, which was slightly above the important support at 1.0477, the highest point on November 15. It remains above the 50-day moving average and the standard pivot point.
The pair is also between the ascending channel shown in black while the Relative Strength Index (RSI) moved slightly above the neutral point of 50. Therefore, the pair will likely continue rising as buyers target the second resistance at 1.0710.