(MENAFN- Daily Forex) Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1000. Add a stop-loss at 1.1190. Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1190. Add a stop-loss at 1.1050.
The EUR/USD currency pair popped and then erased some of the gains after the
federal Reserve slashed interest rates by 0.50%. It initially jumped to a high of 1.1187, its highest point since August 26 and then retreated to 1100 decision and European inflation
The EUR/USD pair rose as the US dollar declined after the Fed delivered the first interest rate cut in over four years as it works to engineer a soft landing.
The bank slashed rates by 0.50%, an aggressive stance aimed at salvaging the labor market, which has been weakening lately.
Data released earlier this month showed that the jobless rate fell from 4.3% in July to 4.2% in August. While the drop was welcome, it remained above 4%, which was much higher than last year's low of 3.5%.
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The Bureau of Labor Statistics (BLS) has also continued to revise its monthly nonfarm payroll numbers downwards, meaning that the labor market is weaker than expected.
In its statement, the Fed sounded confident that the headline consumer inflation would move to its 2% target in the coming months. The most recent data showed that the headline consumer inflation fell to 2.5% in August, its lowest level in over two years.
The EUR/USD pair reacted softly to Wednesday's European inflation data. According to Eurostat, the headline Consumer Price Index (CPI) rose from 0.0% in July to 0.1% in August, lower than the median estimate of 0.2%. It slipped from 2.6% to 2.2% on a year-on-year basis.
The core CPI, which excludes the volatile food and energy products, fell from 2.9% to 2.8% on an annual basis. These numbers came a week after the European Central Bank slashed interest rates again/USD technical analysis
The EUR/USD pair rose and then erased its gains after the Fed decision. Before that, the pair was in a strong uptrend after bottoming at 1.0600 last year. This rally happened as hopes of a Fed cut rose, meaning that it could suffer a reversal since the cuts have started. This is known as buying the rumor, and selling the news.
The pair has also formed a double-top chart pattern at 1.1187. In most cases, this is one of the top bearish signs in the market. Therefore, the pair will likely drop as sellers target the double top's neckline at the psychological point at 1.1000.
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