Bullish view
Buy the EUR/USD pair and set a take-profit at 1.2000.
Add a stop-loss at 1.1600.
Timeline:1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1600.
Add a stop-loss at 1.2000
The EUR/USD exchange rate remained in a tight range at the key support level at 1.1800 after the US released key macro data. It has slipped substantially from the year-to-date of 1.2095.
European Inflation Report
The EUR/USD pair pulled back slightly afterwards the US published a better consumer confidence report. Data compiled by the Confidence Bureau showed that the consumer confidence improved in February as inflation retreated slightly.
The US consumer confidence rose to 91.2 in February from 89 in January. It was better than the average estimated 87. A higher consumer confidence is a sign the economy is doing relatively well since consumer spending is the biggest part of the economy.
The EUR/USD pair also reacted to the latest US house price index report. Prices rose 1.8% in December from the previous 2.1%, while the closely-followed Case-Shiller home price index remained unchanged at 1.4%.
The next key catalyst for the EUR/USD pair will be a non-monetary meeting by the European Central Bank (ECB).
Also, Eurostat will publish the latest headline consumer inflation report. Economists expect the report to show that the headline Consumer Price Index (CPI) slowed to 1.7% from the previous 2.0%. Core inflation, which excludes the volatile food and energy prices, is expected to fall from 2.3% to 2.2%.
These numbers mean the ECB will not have the urgency to cut interest rates in the next monetary policy meetings as it has largely achieved its inflation target.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD exchange rate has come under pressure in the past few weeks, falling from the year-to-date high of 1.2093 in January to the current 1.1800.
It has remained settled at the 50-day Exponential Moving Average (EMA) and inside the ascending channel. It also remains slightly above the Supertrend indicator, a sign that the uptrend is still intact.
However, oscillators have pointed downwards, with the Percentage Price Oscillator (PPO) moving below the zero line. Also, the Relative Strength Index (RSI) has dropped below the neutral point at 50.
Therefore, the pair’s outlook is neutral. A move below the 50-day moving average will point to more downside, potentially to the lowered side of the ascending channel at 1.1600.
The other scenario is where it rebounds as bulls target the upper side of the channel at 1.2000.