Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1800.
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 1.1800.
The EUR/USD exchange rate held steady at 1.1700 on Monday morning ahead of a busy week in which the US and Europe will release their numbers and the European Central Bank (ECB) and the Federal Reserve will deliver their interest rate decisions. It remains slightly below the year-to-date high of 1.1847.
Federal Reserve and ECB Interest Rate Decisions
The EUR/USD exchange rate will be in the spotlight as investors waited for the upcoming Fed and ECB interest rate decisions, which will happen on Wednesday and Thursday this week.
Economists expect the two banks to leave interest rates unchanged as officials observe the impact of the ongoing war on their economies.
The war has led to substantial inflation numbers as crude oil and natural gas prices have soared to their highest level in years. Brent, the global benchmark, jumped to $105 on Monday, while the West Texas Intermediate (WTI) rose to $95. The rise may continue as talks between the two sides stall.
In addition to the central bank decisions, the pair will react to the upcoming macro data. The first one will be the April consumer confidence report, which comes on Tuesday. Economists expect the report to show that confidence dropped from 91.8 in March to 89.5.
The US will also release the latest building permits and housing starts report on Wednesday this week. Another report will come out on Thursday when the US releases the first quarter GDP report, which will likely show that the economy grew by 2.1% in Q1.
The EUR/USD pair will also react to the upcoming European inflation, consumer confidence, and GDP reports.
Additionally, there are concerns about the ongoing Iran war, which will likely resume now that talks between the two sides have ended. In a statement, Trump said he canceled his representatives’ trip to Pakistan after Iranians refused to show up.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD pair has pulled back in the past few days, moving from a high 1.1847 on April 17 to the current 1.1700.
It has settled at the important support level at 1.1700, which is slightly above the 50-day Exponential Moving Average (EMA). Also, it has formed a small bullish engulfing pattern, which is made up of a small bearish candle that is followed by a bigger bullish one.
Therefore, technicals suggest that the pair will rebound, potentially to the key resistance level at 1.1847. A drop below the 50-day moving average 1.1665 will invalidate the bullish outlook.