Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1600.
- Add a stop-loss at 1.1850.
- Timeline: 1-2 days.
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1850.
- Add a stop-loss at 1.1600.
The EUR/USD exchange rate remained unchanged near its highest level since September 2021, as the odds of the Federal Reserve interest rate cuts rose. It was trading at 1.1742, slightly below the year-to-date high of 1.1920.
Federal Reserve Interest Rate Cut Odds are Rising
The EUR/USD exchange rate moved sideways as traders reacted to the latest government shutdown in the United States. This shutdown happened as Democrats and Republicans differed on how to keep the government funded.
Republicans have support a clean spending package, while Democrats have insisted on undoing some of the Republicans’ healthcare and Medicaid.
The odds of Fed cuts rose after ADP published the monthly jobs report on Wednesday. This report showed that the American private sector lost over 36,000 jobs in September, a sign that the labor market is not improving.
The Fed has shifted its focus away from inflation in the past few months. It is instead focusing on the labor market, which has weakened as companies pause hiring because of Donald Trump’s policies.
Trump’s main economic policy has been to impose tariffs on all countries, with some, like India and Brazil, receiving a 50% levy. As such, companies have opted to relax their hiring as they assess the impact.
Therefore, the Federal Reserve may decide to cut interest rates by another 0.25% in the coming meeting in October. On the other hand, the European Central Bank (ECB) has hinted that it will not cut interest rates as the bloc’s inflation has remained near its 2% target.
The main catalysts for the EUR/USD pair on Monday will be statements by top ECB officials like Christine Lagarde, Louis de Guindos, and Philop Lane.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD exchange rate has remained unchanged at 1.1742 on Monday. It has remained slightly above the 50-day Exponential Moving Average. It is also stuck at the Major S&R Pivot Point of the Murrey Math Lines tool.
The pair has also formed a rising wedge pattern, which is characterized by two ascending and converging trendlines. Also, the two lines of the MACD have formed a bearish crossover. The Relative Vigor Index has also formed a bearish crossover and is pointing downwards.
Therefore, the pair will likely remain unchanged in the near term. A break below the lower side of the rising wedge will confirm a bearish breakout, potentially to 1.1600.
Top Forex Brokers
Ready to trade our free Forex signals? Here are the top brokers in Europe to choose from.