Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1270.
Add a stop-loss at 1.1050.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1050.
Add a stop-loss at 1.1270.
The EUR/USD pair has remained inside a narrow range in the past few weeks and is hovering at an important support level. It wavered after last week’s Federal Reserve and European Central Bank (ECB) interest rate decisions. It was trading at 1.1157, a few points above the key support level of 1.1111.
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US Nonfarm Payrolls Data and Midterm Elections
The EUR/USD pair has moved sideways following the interest rate decisions from the Federal Reserve and the European Central Bank (ECB). The Fed kept its benchmark rate unchanged in a range of 3.75% to 4%, while officials signaled that a hike could come at the next meeting in December.
After the report, the US also published more data that largely confirmed the hawkish outlook. A report showed that the headline and core personal consumption expenditure (PCE) remained substantially above the Federal Reserve’s target of 2%. Another report revealed that the US economy did better than expected in the quarter.
The European Central Bank also left rates unchanged at its last meeting. The most notable statement in the report was that Christine Lagarde, the chair, will step down in February next year.
Looking ahead, the pair will next react to the upcoming private payrolls report on Wednesday. The report by the ADP is expected to show that the economy added 68k jobs last month, a sign that the labor market is strong. After that, the US will publish the official jobs report on Friday.
These numbers will provide more information about the state of the economy and what to expect from the Fed in its December meeting. A strong report will give the Fed an incentive to hike interest rates in December.
The EUR/USD pair will also react to the US midterm elections this week. These elections will determine who will control the House of Representatives and the Senate from next year.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has been under pressure in the past few months. It has slipped from a high of 1.1710 in August to the important support level of 1.1111. It was trading at 1.1157, remaining below the 50-day and 25-day Exponential Moving Averages (EMA).
The pair has formed a double-bottom pattern, while the two lines of the MACD indicators have pointed upwards. These patterns point to more gains, potentially to the key psychological level of 1.1270, its highest point on October 16.
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