Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1600.
Add a stop-loss at 1.1750.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1750.
Add a stop-loss at 1.1600.
The EUR/USD pair bounced back as the US dollar and crude oil prices retreated following Donald Trump’s war against Iran. It rose to 1.1720, up substantially from a low of 1.1412, its lowest level in March.
US GDP, PCE, and CPI Data
The US will release several important macroeconomic data in the next two days. Economists expect the upcoming data to show that the GDP expanded by just 0.7% in the fourth quarter, a sharp deceleration from the previous month's 4.4%.
The US will publish the latest Personal Consumption Expenditure (PCE) report, which is the most important inflation gauge. Economists expect the PCE coming in at 2.8% and the core PCE rising 3.0%.
The other key catalyst for the pair will be the upcoming US consumer inflation report on Friday. Economists polled by Reuters expect the report to show that inflation jumped sharply in March, with the CPI rising 3.4% from the previous 2.4%. The core inflation is expected to rise from 2.4% to 2.7%.
The US will also publish the latest factory orders data on Friday. This figure is expected to show that orders dropped by 0.1% during the month.
These numbers come after the Federal Reserve released minutes of the last meeting. These minutes showed that the officials worried that the war would lead to higher inflation and slow economic growth.
Most officials warned that a protracted war will lead to higher inflation, which may push the bank to hike interest rates. On the other hand, officials warned that the labor market would continue getting worse as the war continued.
A recent report showed that the economy created over 176k jobs in March as the unemployment rate dropped to 4.3%. These additions, however, were driven by the ending of a strike by Kaiser Permanente, a top healthcare system. It was also driven by the hiring ahead of the upcoming World Cup.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD pair rebounded to a high of 1.1723, its highest point since March 2nd. It moved to the 200-day Weighted Moving Average (WMA).
Still, the pair remains below the Supertrend indicator, a sign that bears remain in control for now. It also remained below the Major S&R pivot point at 1.1788.
Therefore, the pair will likely resume the downward trend as concerns about the ceasefire remains. If this happens, the next key target level to watch will be the psychological level at 1.1600.