Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1100.
Add a stop-loss at 1.1300.
Timeframe: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1300.
Add a stop-loss at 1.1100.
The EUR/USD pair remained under pressure on Monday morning as market participants waited for major macro data from Europe and the United States. It was trading at 1.1200, down by over 4.3% from its highest point in September this year.
US to Publish Consumer Inflation Data
The EUR/USD pair continued its downward trend as the Saudi Arabia and Houthi fighting accelerated. Houthis launched a major attack against Saudi’s airport, leading to the deaths of over at least 12 people. Over 300 people were injured.
There is a risk that this crisis will escalate, which may lead to more disruption of oil flows from Saudi Arabia, a top exporter. Indeed, Brent and the West Texas Intermediate (WTI) rose to $105 and $92, respectively.
There will be no major macro events from the United States since the markets will be closed for Columbus Day. After that, the first main catalyst to watch will be the German Consumer Price Index (CPI) report, which is expected to come out on Tuesday. Economists expect the data to show that the country’s CPI rose 3.3% last month.
The pair will also react to statements from top Fed officials, including Susan Collins, Tom Barkin, and Christopher Waller. These officials will provide hints on what to expect in the final meetings of the year.
The most important data to watch will be the US consumer inflation report. Economists expect the data to show that the headline CPI rose from 3.4% in August to 3.6% in September. Core inflation, which excludes the volatile food and energy prices, is expected to come in at 2.5% from 2.4% a month earlier. A strong inflation number will lead to higher odds that the Fed will hike rates at least once this year.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD exchange rate has been under pressure in the past few weeks. It has slumped from a high of 1.1712 in August to the current 1.1200. It has slumped below the important support level of 1.1325, its lowest level in June.
The pair has slumped below the 50-day Exponential Moving Average (EMA) and the Supertrend indicator. At the same time, the Relative Strength Index (RSI) has remained in the oversold level. Therefore, the pair will likely continue falling as sellers target the next target of 1.1100.
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