Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1270.
Add a stop-loss at 1.1111.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1111.
Add a stop-loss at 1.1270.
The EUR/USD pair held steady on Wednesday as expectations grew for another European Central Bank (ECB) interest rate hike. The pair climbed to 1.1195, up from last week’s low of 1.1111, as investors turned their attention to the upcoming US jobs report.
Odds of ECB Rate Hike Jump
The EUR/USD pair continued rising after Joachim Nagel, the head of the German Central Bank, hinted that he will support another rate hike in December. He joined other policymakers, including Italy’s Fabio Panetta, Austria’s Martin Kocher, and Estonia’s Ulo Kaasik, who have supported hiking rates in December.
Odds of an ECB rate hike in December jumped to over 80% on Polymarket and Kalshi. If this happens, it will bring the deposit facility rate to 2.75%. Officials have cited the bloc’s high inflation rate for the need to hike rates.
The most recent report showed that Europe’s headline CPI rose 3.8% in September, while the core CPI moved to 2.5%. A report coming out on Wednesday is expected to show that the headline inflation rate rose 4.0% in October as petrol and diesel prices soared.
The other key EUR/USD news will be the upcoming ADP jobs report from the United States. Economists expect this report to show that the economy created 67k jobs after adding 90k in the previous month.
The report will come two days before the Bureau of Labor Statistics (BLS) releases the official nonfarm payrolls report. These numbers will be important as they will help the Federal Reserve when delivering its interest rate decision in December.
The EUR/USD pair will also react to the upcoming US and European services and composite PMI numbers. Additionally, it will likely react to the final outcome of the US midterm elections, where Democrats were leading.
EUR/USD Technical Analysis
On the charts, the EUR/USD pair has been in a narrow range in the past three weeks. It has remained inside the support and resistance levels of 1.1111 and 1.1270.
The pair has remained below the 50-day Exponential Moving Average (EMA) and the Parabolic SAR indicator. It has also remained below the Supertrend indicator.
On the positive side, the pair has formed a double-bottom pattern at 1.1111 and a neckline of 1.1270. Therefore, the pair will likely remain inside this range in the foreseeable future. Because of the double-bottom, it may rebound to the key resistance level of 1.1270. A move above the resistance at 1.1270 will point to more gains.
Comments
Log in or sign up to join the conversation.