Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1850.
- Add a stop-loss at 1.1650.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1650.
- Add a stop-loss at 1.1850.
The EUR/USD pair continued rising, reaching its highest level since September 14 as the US dollar softened after the latest jobs numbers. It rose to 1.1765, much higher than the November low of 1.1470 as focus shifts to the upcoming European Central Bank interest rate decision.
ECB Interest Rate Decision Ahead
The EUR/USD pair continued rising as focus remains on the upcoming ECB interest rate decision on Thursday.
Economists polled by Reuters expect the bank to leave interest rates unchanged at 2% as inflation has remained near the 2% target.
The ECB decision will come a day after Eurostat publishes the latest inflation report. Economists expect the upcoming inflation report to show that the headline CPI rose from 2.1% in October to 2.2% in November, while the core CPI remained unchanged at 2.4%.
Most importantly, analysts expect that the bank will start hiking interest rates in the fourth quarter of next year.
The EUR/USD pair continued rising as investors reacted to the latest US jobs numbers. A report by the Bureau of Labor Statistics show that the economy lost 105k jobs in October and then rebounded by 64,000 in November.
The report also showed that the unemployment rate rose to 4.6%, its highest level in more than four years, a move that may push the Federal Reserve to continue cutting interest rates in the coming year.
The bank slashed interest rates by 0.25% in its last meeting and started its quantitative easing program by buying short-term government bonds worth $40 billion a month.
Looking ahead, the BLS will publish the latest consumer inflation report on Thursday. Economists expect the data to show that the headline and core inflation remained at 3%, higher than the Fed’s target of 2.0%.
EUR/USD Technical Analysis
The EUR/USD pair has rebounded in the past few weeks as investors predict that the Federal Reserve and the European Central Bank (ECB) will diverge on interest rates.
The pair remained above the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bulls have prevailed.
Also, the Relative Strength Index has moved close to the overbought level. The Stochastic Oscillator has moved close to the overbought level.
Therefore, the pair will likely continue rising as bulls target the next key resistance level at 1.1850.
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