Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1500.
Add a stop-loss at 1.1725.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1725.
Add a stop-loss at 1.1500.
The EUR/USD exchange rate pulled back to its lowest point since April 8 this year as US bond yields continued their uptrend. It also retreated to 1.1608 ahead of the upcoming Federal Reserve and European Central Bank (ECB) minutes and European inflation report.
Top Regulated Brokers
ECB and Fed Minutes and European Inflation
The EUR/USD pair continued its downward trend this week as US bond yields soared. Data shows that the 30-year yield jumped to 5.172%, while the ten-year jumped to 4.65%. They have continued to rise after the recent US consumer and producer inflation reports. The headline CPI and PPI jumped to 3.8% and 6%, respectively.
The pair will next react to the upcoming Federal Reserve minutes, which will provide more hints on the last meeting. In it, the bank decided to leave interest rates between 3.50% and 3.75%, with officials hinting that it will maintain them for longer.
The pair will also react to the latest minutes by the European Central Bank. Like the Fed, the bank decided to leave rates unchanged, with officials hinting that it may decide to hike in the June meeting. European officials are concerned about the elevated inflation in the region.
Eurostat will publish the latest European inflation report, which will show how the bloc is being affected by the ongoing war. Economists expect the report to show that the core CPI rose 2.2% in April, while the headline figure jumped to 3.0%.
These numbers will come at a time when European bond market challenges continued rising. Data shows that bond yields in countries like Germany, France, and Spain continued rising as investors anticipated rate hikes this year.
EUR/USD Technical Analysis
The daily chart reveals that the EUR/USD pair has been in a downward trend in the past few days. It has dropped from this month’s high of 1.1855 to the current 1.1610.
The pair has already crossed the important 50-day and 100-day Exponential Moving Averages (EMA). It has also formed a multi-month head-and-shoulders pattern.
The Relative Strength Index (RSI) and the MACD indicators have continued falling. Therefore, the pair will likely continue falling, potentially to the next psychological level at 1.1500. A move above the 50-day moving average at 1.1690 will invalidate the bearish outlook.