Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1915.
- Add a stop-loss at 1.1625.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1625.
- Add a stop-loss at 1.1915.
The EUR/USD exchange rate held steady as several Federal Reserve officials warned about interest rate cuts and the impacts on inflation. It was trading at 1.1728, a few points above last week's low of 1.1645.
Fed Officials Warn on Interest Rate Cuts
Two prominent Federal Reserve officials warned that aggressive interest rate cuts will negatively affect the economy.
In a statement, Alberto Musalem, the head of St. Louis Fed, said that, while he was open to more rate cuts, the bank should do so carefully as inflation has remained above the 2% target for over four years and is moving in the wrong direction.
His statement mirrored that of Beth Hammack, the head of the Cleveland Fed, who said that she saw no need of cutting interest rates in the near term as inflation remains high and the labor market was still strong.
Their statements came after the US released another strong housing market report. The report showed that pending home sales rose by 4% in August as customers cheered the relatively low mortgage rates in the country.
A separate report released last week also showed that new home sales in the United States continued soaring in August, a sign that there is strong demand for housing in the country.
Top Forex Brokers
The EUR/USD exchange rate also reacted to several statements from European Central Bank officials like Isabel Schnabel, Philip Lane, and Pedro Machado. Most of these officials sounded comfortable on where inflation and interest rates are.
The EUR/USD pair will react mildly to the upcoming German economic numbers like inflation and retail sales. While important, these macro numbers will not have a major impact on the European Central Bank. Instead, a speech by Christine Lagarde may have an impact on the pair.
The EUR/USD exchange rate will react to the upcoming US consumer confidence report, JOLTS job openings, and consumer confidence report data.
EUR/USD Technical Analysis
The EUR/USD exchange rate has been in a strong uptrend in the past few days. It has moved above the ascending trendline that connects the lowest swings since May 12.
The pair has remained above the 100-day Exponential Moving Average (EMA). The Relative Strength Index (RSI) has moved to the neutral point at 50, while the MACD has remained above the neutral level.
Therefore, the pair will likely continue rising as bulls target the year-to-date high of 1.1915. A move above that level will point to more gains to the important resistance level at 1.2000. A move below the ascending trendline will invalidate the bullish outlook.
Ready to trade our free trading signals? We’ve made a list of the best European brokers to trade with worth using.