Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1480.
- Add a stop-loss at 1.1700.
- Timeline: 1-2 days.
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1700.
- Add a stop-loss at 1.11480.
The EUR/USD pair retreated as investors embraced a risk-off sentiment in the market ahead for the upcoming Federal Reserve minutes and US jobs report. It dropped slightly to 1.1585, much lower than the year-to-date high of 1.1916.
Key Macro Events Ahead
The EUR/USD exchange rate retreated as market risks rose, with American stock indices falling sharply on Monday. The closely-watched indices like the S&P 500 and the Nasdaq 100 indices fell by over 1%.
Mark participants are wary about the upcoming Nvidia earnings, which will help to determine whether the stock market bull run will continue or turnaround. Nvidia is one of the most important companies in the United States as it is the biggest manufacturer of AI chips.
The EUR/USD pair also pulled back as investors waited for the upcoming FOMC minutes, which will provide more information on what to expect from the Fed in the coming meetings. These minutes come as doubts are emerging on whether the bank will cut in December or not.
The other key EUR/USD news is the upcoming statements by some European Central Bank (ECB) officials like Pedro Machado and Anneli Tuominen, who will talk about the state of the European economy and hints on what to expect in the last meeting of the year.
Economists expect the bank to maintain interest rates unchanged in this meeting now that inflation is hovering near its 2% target. A report to be released on Wednesday is expected to show that the headline Consumer Price Index retreated to 2.1% in October from the previous 2.2%.
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The EUR/USD pair will also react to the upcoming US non-farm payrolls (NFP) data scheduled on Thursday this week. The Bureau of Labor Statistics will publish the first jobs reporting since the government shutdown happened.
EUR/USD Exchange Rate Technical Analysis
The daily timeframe chart shows that the EUR/USD exchange rate has pulled back in the past two consecutive days, moving from last week's high of 1.1640 to the current 1.1590.
It has moved below the Supertrend indicator and the 50-day Exponential Moving Average (EMA), a sign that bears are in control. The pair also formed a head-and-shoulders pattern, a common bearish reversal sign.
The Average Directional Index has pointed downwards, a sign that the recent momentum has faded. Therefore, the pair will likely resume the downward trend and possibly move to the key support at 1.1478.
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