EUR/USD Forex Signal: Moving to the Overbought Zone

The EUR/USD pair continued rising ahead of a policy statement by the Fed Chair. 

Bearish view

  • Sell the EUR/USD pair and set a take-profit at 1.0500.
  • Add a stop-loss at 1.0600.
  • Timeline: 1-2 days.

Bullish view

  • Buy the EUR/USD pair and set a take-profit at 1.0850.
  • Add a stop-loss at 1.0650.

The EUR/USD price continued rallying as investors predicted that the Federal Reserve will dial back its aggressive tightening policy. It rose to a high of 1.0750, the highest point since June 9 of 2022. It has rallied by over 12.5% from the lowest point in 2022.

Fed Chair speech ahead

The EUR/USD exchange rate continued rising as the market started focusing on the next actions of the Federal Reserve. It rallied after data by the Labor Department showed that wage inflation was cooling down after months of rising.

Non-Farm Payrolls (NFP) data by the Bureau of Labor Statistics (BLS) showed that the country’s unemployment rate dropped to 3.5% in December. However, wages grew by 4.7%, which was lower than the previous month’s 5.2%.

The Fed has been working to reduce the strength of wages. There are signs that this trend will continue as white collar layoffs increase. Media reports said that Goldman Sachs was considering laying off over 3,000 workers as profitability dropped.

Last week, Amazon confirmed that it will slash over 18,000 jobs while Salesforce will shed about 10% of its workforce. Other companies like Meta Platforms, BigCommerce, Coinbase, and Twitter have also fired thousands of people.

The next key catalyst for the EUR/USD pair will be the upcoming statement by Jerome Powell. In it, he is expected to talk about the state of the American economy and give hints about what the Fed will do. With bond yields falling and stocks soaring, Powell will likely remain adamant that the Fed will continue with its aggressive policy. Besides, inflation is still significantly above the target of 2.0%.

Meanwhile, data from Europe pointed to further hikes by the European Central Bank (ECB). The bloc’s unemployment rate fell to a record low, with the number of unemployed falling to 10.8 million. It stands at about 6.5%.

EUR/USD forecast

The EUR/USD pair continued rising ahead of a policy statement by the Fed Chair. It is approaching the upper side of the ascending channel shown in black. The pair rose above the 25-day and 50-day moving averages and the important resistance at 1.0720. At the same time, the Relative Strength Index (RSI) and the Stochastic Oscillator have moved above the overbought level.

Therefore, the pair will likely retreat after Jerome Powell’s statement. If this happens, the next key support point to watch will be at 1.0500.


Ready to trade our daily Forex signals? Here’s a list of some of the best Forex brokers to check out.

Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube,, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.