Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0900.
- Add a stop-loss at 1.100.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0975 and a take-profit at 1.1035.
- Add a stop-loss at 1.0900.
The EUR/USD exchange rate remained in a tight range as traders reflected on the relatively important economic numbers from Europe and the US. The pair also reacted to a hawkish statement from an ECB official. It was trading at 1.100, which is much lower than last month’s high of 1.1140.
Focus on US inflation
The EUR/USD pair remained steady as the price of crude oil crashed hard on Monday. Brent, the global benchmark, retreated by more than 4% to $75.71 while West Texas Intermediate (WTI) dropped to $70.30.
Oil retreated after Saudi Arabia reduced its official selling price for oil exports in February. Saudi Arabia is aiming to grow its market share in the crude oil industry in a bid to compete with America’s shale producers.
This is an important development that could have an impact on global inflation. Recent economic numbers showed that inflation in the US and Europe is retreating. In the US inflation moved from 9.1% in 2021 to 3.1%.
The most important EUR/USD news will be the upcoming US inflation numbers on Thursday. According to Investing, economists expect the data to show that the headline inflation rose from 3.1% in November to 3.2% in December. They see the core inflation falling to 3.8%.
These numbers will come a few days after the US published the latest jobs numbers. According to the BLS, the unemployment rate remained at 3.7% as the economy created over 220k jobs. Wage growth was also strong during the month.
The EUR/USD pair also reacted to strong economic data from Europe. In Germany, imports rose by 1.9% while exports surged by 3.7%. Meanwhile, in Europe, consumer confidence improved to minus 15 while retail sales fell by 1.1% in November. Economists were expecting a 1.5% decline.
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EUR/USD forecast
The EUR/USD pair retreated to a low of 1.0877 last week and then bounced swiftly even after the strong US jobs numbers. On the 4H chart, the pair is between the first and second support levels of the Andrews pitchfork tool. It has also moved below the 23.6% Fibonacci Retracement level and the 50-period moving average.
The EUR/USD pair has also retreated below the key resistance at 1.1000, the highest swing on December 14th. Therefore, the outlook for the pair is neutral with a bearish bias. If this happens, the next level to watch will be at 1.0900.
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