Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.1650.
• Add a stop-loss at 1.1900.
• Timeline: 1-2 days.

Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.1900.
• Add a stop-loss at 1.1650.
   

(Click on image to enlarge)

The EUR/USD exchange rate retreated for three consecutive days, moving from last week’s high of 1.1920 to 1.1747. It remains much higher than August’s low of 1.1390. The focus now shifts to the upcoming US data and Federal Reserve officials' statement.
 

Fed Speak and Economic Data

The EUR/USD pair pulled back as traders reflected on the Federal Reserve interest rate decision. As was widely expected, Jerome Powell and his committee decided to slash interest rates by 0.25%. It brought the rates to between 4.00% and 4.25%.

The pair also dropped as European Central Bank officials maintained mixed opinions on the pace of interest rate cuts. In a statement, Yannis Stournaras, a member of the governing council, said that the bank was probably done cutting rates. He noted that the bank was in a good equilibrium of low unemployment rate and inflation.

In another statement, De Guindos, the bank’s vice president, urged for caution when determining whether to cut or hold interest rates steady. He also noted that the rate cut cycle was probably not over yet.

The next important catalysts for the EUR/USD pair will be statements by top Federal Reserve officials, including Stephen Miran, who made the case for a 50 basis points cut in the last meeting.

Further, S&P Global will publish the flash manufacturing and services PMI numbers on Tuesday. The other key numbers to watch will be the finl estimate of Q2 GDP data on Thursday and the personal consumption expenditure (PCE) on Friday.

PCE is a closely watched inflation number because it is the Federal Reserve’s favorite inflation data. However, with the Fed now focusing on the labor market, the impact of this report will be limited.
 

EUR/USD Technical Analysis

The daily chart shows that the EUR/USD pair has pulled back sharply in the past few days. It moved from a high of 1.1920 last week to the current 1.1747.

The pair crossed the key support at 1.1834, where it formed the highly bearish double-top pattern. A double-top is one of the most bearish patterns in technical analysis.

The Relative Strength Index (RSI) indicator is about to move below the neutral point at 50. Therefore, the pair will likely continue falling as sellers target the key support at 1.1650.

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