Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1470.
- Add a take-profit 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 1.1470.
The EUR/USD pair was flat after a series of US macro data raised the odds of interest rate cuts by the Federal Reserve. It was trading at 1.1585 on Wednesday, a few points above this month’s low of 1.1467.
Odds of Federal Reserve Interest Rate Cuts Rise
The EUR/USD exchange rate was little changed after the latest macro data from the United States.
A report by the Commerce Department showed that core retail sales dropped to 0.2% in September from the previous month's 0.6%. The headline retail sales slowed from 5% to 4.3%, a sign that consumers have started cutting spending as inflation remained high.
Another report showed that core Producer Price Index (PPI) dropped from 2.9% to 2.6%, while the headline PPI remained at 2.7%.
Most importantly, US consumer confidence dropped from 95.5 in October to 88.7 this month, the lowest level in months. This decline happened as investors reacted to the elevated inflation and rising concerns about the labor market.
Meanwhile, another report by ADP showed that the number of private payrolls dropped by 13.5k last week, a sign that the labor market is deteriorating.
Therefore, traders anticipate that the Federal Reserve will continue cutting interest rates in its December meeting. Polymarket data shows that odds of a cut have jumped from below 30% last week to 80%.
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The EUR/USD pair also retreated as Kevin Hassett became the frontrunner to become the next Federal Reserve chair. Hassett is a Trump loyalist who will likely maintain a dovish policy.
The EUR/USD pair will likely remain in this range as volume drops because of the upcoming Thanksgiving holiday. There will be no major economic data from the US and the European Union.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD pair has slipped from the year-to-date high of 1.1918 in September to last week's low of 1.1467. It has now moved upwards a bit to the current 1.1580
The pair has moved below the Supertrend indicator, which is a bearish view. It has also remained below the 50-day Exponential Moving Average (EMA).
There are signs that the pair has formed a head-and-shoulders pattern, a popular bearish reversal sign. Therefore, the most likely EUR/USD exchange rate is bearish, with the next key support level at 1.1467, its lowest level last week.
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