Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0685.
- Add a stop-loss at 1.0835.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0740 and a take-profit at 1.0800.
- Add a stop-loss at 1.0680.
The EUR/USD pair continued its strong bearish trend this week as traders reflected on the strong US manufacturing report. It crashed to a low of 1.0730 on Tuesday morning, much lower than last month’s high of 1.0980.
Key Federal Reserve speakers
The EUR/USD pair retreated ahead of crucial statements by key Federal Reserve officials. Michele Bowman, the head of the Kansas Fed, John Williams of New York, Loretta Mester of Cleveland, and Mary Daly of San Francisco, will deliver statements.
These will be important statements since they will come a day after the US published strong manufacturing data. According to the ISM, the country’s manufacturing PMI rose above 50 for the first time since 2022.
The PMI rose from 47.2 in February to 50.3 in March, higher than the expected 48.5. This jump happened as the manufacturing price index rose from 52.3 to 55.8 in the same month.
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These numbers mean that the country’s manufacturing sector is doing well, helped by the stimulus packages by the Biden administration. Some of these funds have moved to the manufacturing of key items like semiconductors.
The Fed has pointed out that it will deliver three rate cuts this year. However, many analysts don’t see a reason for all these cuts since the economy is doing well and stocks are sitting at their all-time highs. The unemployment rate remains below 4% while core inflation is almost double the Fed’s target of 2.0%.
The US will publish the February JOLTs job openings report later on Tuesday. Economists see the figure coming out at 8.79 million, a drop from the previous month’s 8.86 million. These numbers will come a few days before the US releases the official nonfarm payrolls (NFP) report.
Germany will also release the preliminary inflation number for March. Economists see the data coming in at 2.2%, lower than February’s 2.5%. If this is correct, it means that the ECB will achieve its 2% target earlier than the Fed.
EUR/USD technical analysis
The EUR/USD pair has been in a strong downward trend after peaking at 1.0980 in March. On the daily chart, it has slipped below the Woodie pivot point and the Ichimoku cloud indicator. The pair has also tumbled below the 50-day moving average, meaning that bears are in control.
Further, oscillators like the Relative Strength Index (RSI) and the Average Directional Index (ADX) have all pointed downwards. Therefore, there are signs that the pair will continue falling ahead of the statements by Fed officials. If this happens, the pair will likely drop to the first support of the Woodie pivot point at 1.0685.
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