Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1650.
Add a stop-loss at 1.1800.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1800.
Add to a stop-loss at 1.1650.
The EUR/USD pair settled at the crucial support at the 50-day Exponential Moving Average (EMA) ahead of the upcoming European Central Bank (ECB) and Federal Reserve interest rate decisions. It was trading at 1.1715, down from this month's high of 1.1847.
Federal Reserve and ECB Interest Rate Decision
The EUR/USD pair has come under pressure this week as crude oil prices jumped, with Brent and the West Texas Intermediate (WTI) rising to $112 and $100.
The ongoing crude oil price rally will lead to a higher consumer inflation as gasoline, fertilizer, and wheat prices soar. As a result, chances are that the headline consumer price index will continue rising. A recent report showed that the headline CPI rose to 3.3% in March this year, and may hit 4% soon.
Therefore, the Federal Reserve will likely address the impact of rising inflation on the economy. Most analysts expect the bank will leave interest rates unchanged between 3.50% and 3.75%.
Still, the EUR/USD pair will react to key statements in the Fed decision, including on the future of Jerome Powell’s role going forward. He may decide to leave the Fed after his term ends or remain there until 2028.
The other important catalyst for the EUR/USD pair will be the upcoming European Central Bank (ECB) interest rate decision on Thursday. Like the Fed, analysts expect the bank to leave rates unchanged as it observes the impact of the war on inflation and the European economy.
The pair will also react to the upcoming inflation numbers from some key European countries like Germany, Spain, and Italy. Also, the European Commission will release the latest consumer and business consumer confidence.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD pair was trading at 1.1700 on Wednesday morning. This price is slightly above the 50-day Exponential Moving Average (EMA) and the Supertrend indicator.
The pair has remained slightly below the Major S/R Pivot Point of the Murrey Math Lines tool. It has also formed a small bearish flag pattern, a common continuation sign in technical analysis.
Therefore, the pair will likely resume the downward trend in the near term, potentially to the key support at 1.1650. On the flip side, a move above the resistance at 1.1750 will invalidate the bearish outlook.