EUR/USD Forex Signal: Sits At A Crucial Support Ahead Of Fed

5/24/2023 2:22:07 PM

(MENAFN- Daily Forex) Advertisement see for yourself why eur/usd is the most traded pair trade eur/usd now Bearish view

Sell the eur/usd pair and set a take-profit at 1.0670.
Add a stop-loss at 1.0825.
Timeline: 1-2 days.

Bullish view

Set a buy-stop at 1.0800 and a take-profit at 1.0900.
Add a stop-loss at 1.0700.

The EUR/USD pair dropped to an important support level ahead of the upcoming FOMC minutes. It dropped to a low of 1.0760 after the latest US housing data and the mixed manufacturing and services PMI numbers.FOMC minutes ahead

The American and European economies are showing some similarities. Flash data published on Tuesday showed that the services sector is outperforming the manufacturing industry. In Europe, the manufacturing PMI dipped from 45.8 in April to 44.6 in May. That decline was worse than the expected 46.2.

The closely-watched services PMI in the bloc dropped slightly to 55.9. This decline was better than the median estimate of 55.6. The same trend happened in the US, where the services sector outpaced the manufacturing industry. Data showed that the services PMI rose from 53.6 in April to 55.1 in May while the manufacturing PMI dropped to 48.5.

Additional data from the US showed that new home sales jumped from 656k in March to 683k. The 4.1% increase was better than what analysts were expecting. These numbers mean that the country's housing sector is being resilient despite the rising interest rates.

The next key catalyst for the EUR/USD pair will be the upcoming minutes by the Federal Reserve. These minutes will provide detailed information about what the committee did in the past meeting. In it, the committee decided to hike interest rates by 0.25% and continue with its quantitative tightening policy.

Fed officials have expressed mixed signals about what to expect in the coming meeting. Some, like Raphael Bostic and Neel Kashkari, have supported leaving rates intact in June. Others like James Bullard and Thomas Barkin have supported another 0.25% rate hike in June. The EUR/USD pair will also react to the debt ceiling issue.EUR/USD technical analysis

The EUR/USD pair retreated to the important support level at 1.0760, the lowest point last week. It has formed a small double-bottom pattern whose neckline is at 1.0830. The pair has moved below the 25-period and 50-period moving averages.

It is approaching the first support of the Woodie pivot point while the MACD is stuck below the neutral point. Therefore, despite the small double-bottom pattern, the pair will likely continue falling as sellers target the second support at 1.0670.

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