(MENAFN- Daily Forex) Bearish view
- Sell the pair and set a take-profit at 0.9425.
- Add a stop-loss at 0.9650.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.9675 and a take-profit at 0.9800.
- Add a at 0.9550.
The EUR/USD price continued its bearish trend as hopes of a more hawkish Federal Reserve converged with concerns of European economy. It dropped to a two-decade low of 0.9580, which was about 15.8% below where it started the year. Advertisement Fed tightening hopes
The EUR/USD price continued falling as the market reacted to the latest America's consumer confidence data. According to the Conference Board, the country's consumer confidence rose from 103.6 in August to 108. This increase was bigger than the median estimate of 104.5. It was also the second straight month that confidence rose.
Consumer confidence is an important data because consumer spending is the biggest part of the American economy. As such, higher confidence is seen as a positive sign since highly confident households spend more.
According to the board, most consumers attributed this strength to the falling gas prices. The average gasoline price has fallen from $5 to less than $4. At the same time, inflation expectations have dropped in the past few weeks.
The EUR/USD pair also dropped after the relatively strong new home sales data. The numbers showed that new sales rose by 28.8% in August to 685k. Therefore, these numbers signal that the Fed has more room to continue hiking interest rates in the coming months.
Meanwhile, the pair also continued falling as investors focused on the energy crisis in Europe. On Tuesday, Sweden detected two underwater explosions that led to gas leaks in Nord Stream 1 gas pipeline. Germany and the United States blamed Russia for the sabotage.
As such, it means that Russia will not be able to deliver gas to the bloc ahead of the Winter season. Fortunately, countries like Italy have secured enough winter supplies. Germany and other European countries are also luring countries like Qatar and Saudi Arabia to sell them more gas.EUR/USD forecast
The EUR/USD pair has been in a strong trend in the past few months. Last week, it finally managed to move below the important support level at 0.9876, where it struggled moving below earlier this year.
The pair dropped below the 25-day and 50-day . At the same time, the MACD has moved sharply below the neutral level. It is also hovering slightly above the first support of the standard pivot point. Therefore, the pair will likely keep falling as sellers target the second support at 0.9420.
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