EUR/USD Signal 28/10: Steeper Retreat Ahead Of FOMC Decision

(MENAFN- Daily Forex) Bearish view

Sell the EUR/USD pair and set a take-profit at 1.1050. Add a stop-loss at 1.1200. Timeline: 1-2 days.

Bullish view

Buy the EUR/USD pair and set a take-profit at 1.1200. Add a stop-loss at 1.1050.

The EUR/USD pair dropped and approached a key support level after the US published a strong consumer confidence and housing report on Tuesday. It dropped to 1.1125, its lowest swing since October 14 and 5% below its highest point in September. Focus will now be on the upcoming Federal Reserve and European Central Bank (ECB) decisions.

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The EUR/USD pair dropped as the US dollar bounced back after the US published strong numbers. A Conference Board report showed that consumer confidence rose to 91.7 in October, higher than the expected 81.2. It was also higher than the previous month's 84.2.

A rising consumer confidence report is an important signal since consumer spending is the biggest part of the economy. Analysts were expecting the report to show that confidence dipped as gasoline and diesel prices has soared this year.

Another report showed that new home sales came in at 676,000, much higher than the expected increase of 651,000. These numbers are important because they came a day before the Federal Reserve delivers its interest rate decision.

EURUSD Chart by TradingView

Economists expect the bank to leave interest rates unchanged between 3.75% and 4% as officials observe the impact of the last hike on inflation. After that, the pair will react to the first estimate of US third-quarter GDP. It will also react to the September personal consumption expenditure (PCE) report.

The other notable catalyst for the pair will be the European Central Bank (ECB) decision on Thursday. Economists expect the bank to also leave interest rates unchanged in this meeting as it also observes the impact of the September rate hike/USD Technical Analysis

The daily chart shows that the EUR/USD pair has been under pressure in the past few months and is now hovering near the key support level of 1.1111, its lowest level on October 14. It has slumped in the last five consecutive days.

The pair has dropped below the 50-day moving average and the Supertrend indicator. These technicals suggest that bears are in control for now. The Relative Strength Index (RSI) has continued falling

Therefore, the pair will likely continue falling, potentially to the key support level of 1.1050. This view will be confirmed if it drops below the key support of 1.1110.

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