Bullish Outlook
- Consider buying the EUR/USD pair, aiming for a take profit at 1.1805.
- Set a stop loss at 1.1550.
- Timeframe: 1-2 days.
Bearish Outlook
- Thinking about selling the EUR/USD pair, with a take profit at 1.1550.
- Implement a stop loss at 1.1805.
The EUR/USD pair has been declining this week, particularly after Eurostat published new consumer inflation data. It was trading around 1.1682, which is quite a drop from December’s peak of 1.1805.
European Inflation Meets Target
The slip in the EUR/USD exchange rate follows a report from Eurostat indicating that inflation in the region has hit the European Central Bank’s (ECB) target for December. The primary consumer price index (CPI) dropped to 2% for the first time since summer.
Core inflation, which leaves out the more unstable food and energy prices, stayed steady at 2.2% last month. Regional inflation could keep decreasing, largely because of falling energy costs. Some analysts believe it might soon dip below the ECB’s forecast of 1.9%.
The bank’s economists now predict the region’s economic growth rate at 1.2% this year, revising it up from an earlier expectation of 1%. This indicates that an interest rate increase from the bank could be on the horizon, potentially happening within the month.
The EUR/USD also reacted to ADP’s December employment figures. The data revealed that private sector jobs increased by over 45,000 in December, following a reduction of more than 29,000 jobs the previous month.
The upcoming US employment report is also pivotal since it’s expected to reveal that 64,000 jobs were added in December, mostly in services. Yet, the manufacturing sector has seen significant job cuts over the past year.
Moreover, thousands of government employees accepted resignations prompted by Donald Trump, which has contributed to a rise in the unemployment rate to 4.6%.
EUR/USD Technical Outlook
From a technical standpoint, the daily chart indicates that the EUR/USD pair has fallen recently, dropping from a peak of 1.1805 to the current level of 1.1680. It has slid beneath a diagonal trend line that connects the lows from last November and December.
On a brighter note, the supertrend indicator remains green, and the pair is above the 50-day exponential moving average (EMA). The average directional index (ADX) has also started to trend downward.
This suggests there could be a potential rebound, with buyers likely targeting the significant resistance level at 1.1805, which was reached on December 24. If the price breaks above this level, it could open the path to another key point at 1.1920.
