The week will be important for EUR/USD as Fed, ECB and many important macro data are expected.
EUR/USD in balance awaiting Fed, ECB and several important macro data
The EUR/USD price has been holding steady around $1.10 for almost a month ahead of the Fed and ECB monetary policy meetings. The FOMC is expected to hike rates by 25 basis points on Wednesday evening, but the focus will be on Jerome Powell’s press conference, especially his comments on the future of monetary tightening as traders braced for the first rate drop from the initial slide. Cut is expected.
The ECB is also expected to raise rates by 25 basis points, but a larger rate hike remains on the table. Furthermore, Christine Lagarde may comment on quantitative tightening and perhaps even intensify it given the persistence of inflation for several months and the powerful rebound in European equity markets, which suggests that liquidity remains abundant.
Apart from the monetary policy meetings from the Fed and ECB, traders will closely monitor the ISM Manufacturing Index, CPI inflation in the Euro area and the JOLTS report on employment in the United States due to be released on Monday. Tuesday, the ISM Services Index on Wednesday and the United States Unemployment Rate/NFP on Friday.
EUR/USD Daily Price Chart – Key Levels
EUR/USD Price Prediction
EUR/USD is below the key resistance area at $1.10
From a technical analysis perspective, the EUR/USD setup is neutral in the short term, but the underlying trend remains bullish. EUR/USD has been consolidating for several weeks after rising to the indicative range at $1.10. The risk/reward ratio is technically in favor of the dollar rallying below this threshold, but it would be better to wait for bearish signals, such as a pullback below the 20-day moving average, currently at $1.0980. If so, a fall in EUR/USD to the March low of $1.05 would be possible.
Otherwise, if the resistance area at $1.10 is broken, the risk/reward ratio will shift back in favor of EUR longs. A continuation of the underlying uptrend up to $1.15 would be expected in the next few months.
|Entry||Shorts Under $1.09|
|risk/reward ratio||> 2|