(MENAFN- Daily Forex) Bearish view
Sell the EUR/USD pair and set a take-profit at 1.0800. Add a stop-loss at 1.0925. Timeline: 1-2 days.
Bullish view
Set a buy-stop at 1.0865 and a take-profit at 1.0925. Add a stop-loss at 1.0800.
The EUR/USD pair wavered this week as focus shifted to statements from key Federal Reserve and European Central Bank (ECB) officials. After peaking at 1.0895 on Friday, the pair pulled back to 1.0850 ahead of the upcoming FOMC minutes .FOMC minutes ahead
The US and the European Union published their most important numbers of the month last week. In a report, the US BLS said that the headline Consumer Price Index (CPI) dropped to 0.3% MoM and 3.4% YoY in April. The US also published weak retail sales, industrial production, and housing starts numbers.
In Europe, the statistics agency confirmed that the bloc's inflation remained at 2.4% in April while the labor market remained vibrant.
This week, the main focus among EUR/USD traders is on statements from key central bank officials and the FOMC minutes. In a statement on Tuesday, Christine Lagarde confirmed that the bank was considering cutting rates by 0.25% in its June meeting unless something drastic happened.
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The main concern among economists and policymakers is what comes after the first rate cut. In an interview on Tuesday, Joachim Nagel, the head of the German Central Bank, said that caution was warranted after the first cut. He expects that the bank will wait for more data before implementing more rate cuts.
Federal Reserve officials also expressed caution of when the first rate cut will come. In a statement, Raphael Bostic of Atlanta Fed noted that inflation will continue falling at a slower pace this week. He expects the first cut to come in the fourth quarter.
Christopher Waller, a Fed governor, said that the bank will be patient as it observes inflation trends in the US. It will cut rates if inflation moves near the 2% target.
Looking ahead, there will be no major economic number from the US on Wednesday. Instead, traders will focus on the Federal Reserve minutes, which will provide more color about the last meeting/USD forecast
The EUR/USD pair's rally stalled this week as focus shifted to the upcoming FOMC minutes. It was trading at 1.0856, a few points below this month's high of 1.0900. It has now moved below the crucial support at 1.0870, the 50% Fibonacci Retracement level .
Also, the pair has formed a small double-top pattern whose neckline was at 1.0835. Therefore, while the outlook is bullish , the pair will likely have a brief retreat as sellers target the psychological point at 1.0800.
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