Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1040.
- Add a stop-loss at 1.0850.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0925 and a take-profit at 1.0850.
- Add a stop-loss at 1.1040.
The EUR/USD price continued its bullish trend and is hovering near the highest point since August 11th. The pair has surged by over 4.7% from its lowest point this year. It has coincided with the crashing US dollar index (DXY).
US building permits and new home sales data
The EUR/USD pair has been in a strong uptrend in the past few weeks. It has jumped as investors have placed their bet that the Federal Reserve has ended its rate hikes after it pushed them from zero to between 5.25% and 5.50%.
The recent data shows that America’s inflation dropped from 3.7% in September to 3.2% in October. Core inflation, which excludes the volatile food and energy prices, has dropped to about 4%.
There is a likelihood that inflation drifted downwards again in November as energy prices retreated. Brent, the global benchmark, dropped to $80 while the West Texas Intermediate (WTI) moved to $75. The average gasoline price in the US has dropped to $3.25 down from last month’s $3.53. Gas prices stood at $3.56 a year ago.
The next important inflation gauge to watch will come later this week when the US will publish the latest PCE data. Economists expect the data to show that the PCE rose by 3.1% on a YoY basis while the core PCE rose by 3.5%.
The other EUR/USD news will be the upcoming European inflation data for November. Economists expect the data to show that the euro area inflation dropped to 2.7% on a YoY basis, the lowest point since July 2021. The underlying inflation is expected to come in at 3.9%. These numbers will come out on Tuesday.
The US will also publish the latest building permits and new home sales data on Monday. Building permits are expected to come in at 1.48 million and new home sales are expected to be at 721k.
EUR/USD technical analysis
The EUR/USD exchange rate has been in a strong bullish trend in the past few days. It is nearing the 61.8% Fibonacci Retracement level. The pair has moved above the 50-period Arnaud Legoux Moving Average (ALMA). It has risen above the Woodie pivot point.
The Stochastic Oscillator has moved to the overbought point, signaling that it has momentum. Therefore, the pair will likely continue rising as buyers target the first resistance point at 1.1040.
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