Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1400.
Add a stop-loss at 1.1550.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1550.
Add a stop-loss at 1.1400.
EUR/USD remains under pressure this week as investors focus on the recent Federal Reserve and European Central Bank (ECB) interest rate decisions. It was trading at 1.1486 ahead of a relatively muted week, in which there will be no major macroeconomic news from the US and Europe.
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ECB and Fed Interest Rate Decisions
The EUR/USD pair has slumped in the past few weeks as investors have reacted to the recent statements by the European Central Bank (ECB) and Federal Reserve decisions.
In a statement two weeks ago, the ECB decided to hike interest rates by 0.25%, pointing to the rising inflation rate. Officials, including Christine Lagarde, hinted that the bank will deliver another rate hike this year. Odds of this happening have risen on Polymarket.
Elsewhere, in the United States, the Federal Reserve delivered a highly hawkish decision last week. The Federal Open Market Committee (FOMC) voted unanimously to hike rates by 0.25%, a move that continued to disappoint President Donald Trump, who has insisted that rates should drop to 1% or below.
Kevin Warsh, the Fed Chair, maintained that inflation remained at an elevated level and hinted that the bank will deliver another hike later this year. Odds that this will happen have remained above 80% on Polymarket and the CME FedWatch tool.
The economic calendar is a bit light this week, with no major macro events from the US and Europe. Some of the most important data to watch this week will be the flash manufacturing and services numbers from the two sides.
At the same time, traders will react to the rising energy prices. Brent and the West Texas Intermediate (WTI) have jumped to above $100, while the prices of refined products has continued rising. The most dire situation is in the diesel market, where some countries are facing shortages.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has come under pressure in the past few days as the US dollar has continued rising. It has slumped below the 50-day Exponential Moving Average (EMA).
The pair is slowly forming a bearish flag pattern, which happens after an asset experiences a strong retreat. This pattern suggests that the pair will likely continue falling in the coming days. If this happens, the next key target to watch will be the psychological level of 1.1400.
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