Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1400.
Add a stop-loss at 1.1715.
Timeline: 1-3 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1715.
Add a stop-loss at 1.1400.
The EUR/USD pair rose after the US released a weak February jobs report on Friday. It jumped to 1.1616 on Monday, up from last week’s low of 1.1530. The pair will be in focus this week as the war escalates and as the US releases the latest consumer inflation report.
US Consumer Inflation Data Ahead
The EUR/USD pair rose slightly after the US released the February jobs report. According to the Bureau of Labor Statistics (BLS), the economy lost 92,000 jobs in February after adding 126,000 jobs in January. Wall Street analysts were expecting the report to show that the economy added over 56 jobs.
The report also revealed that the US unemployment rate ticked up slightly from 4.3% in January to 4.4% in February. These numbers mean that the labor market is in a worse shape than expected. As a result, some Federal Reserve officials - like Stephen Miran and Christopher Waller - will continue pushing for lower interest rates.
The challenge, however, is that inflation is expected to remain at an elevated level as the war in Iran continues. Crude oil continued soaring after Israel and Iran attacked some energy infrastructure in the region. Natural gas and other energy products have all soared in the past few days.
Historically, these numbers lead to higher inflation because of their impact on everything. As such, it will be hard for the Fed to cut rates as that may worsen the state of inflation in the country.
The next key report to watch will be the upcoming US consumer inflation data, which will come out on Wednesday. Economists expect the report to show that the headline CPI rose 2.4% in February.
EUR/USD Technical Analysis
The EUR/USD pair has remained under pressure in the past few weeks as investors moved to the safety of the US dollar amid the rising risks. It has now settled at the 23.6% Fibonacci Retracement level.
The pair’s Supertrend indicator has turned red for the first time since February this year. It has also retreated below the 50-day moving average.
The pair is slowly forming a bearish pennant pattern. This pattern is comprised of a vertical line and a triangle pattern. Therefore, the most likely scenario is where it continues falling, potentially to the psychological level at 1.1400. This view will be confirmed if it drops below the support at 1.1533.