Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.0830.
• Add a stop-loss at 1.0675.

Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.0645.
• Add a stop-loss at 1.0780.

The EUR/USD price is hovering near its lowest level since March 21st this year as more signs showed that the Federal Reserve could hike rates again in June. The pair was trading at 1.0717, a few points above Tuesday’s low of 1.0671.
 

Consumer Confidence and housing data

The EUR/USD pair retreated after the US published better-than-estimated consumer confidence numbers. According to the Conference Board, consumer confidence dropped slightly to 102.3 in May from the previous month’s 103.7. This decline was better than the median estimate of 99.0. The agency cited the ongoing lack of confidence in the labor market.

Further data showed that the housing sector was doing better than estimates. The report revealed that the house price index rose by 0.6% in from February to March. This increase translated to a year-on-year jump of 3.6%. The housing sector has been relatively resilient, helped by the country’s low inventories.

These numbers came after the US published strong personal consumer expenditure (PCE) data. The data, which the Fed pays close attention to, showed that the country’s inflation remains at an elevated level.

Therefore, with inflation being sticky and consumer confidence steady, there is a likelihood that the Fed will deliver another 0.25% rate hike in June.

The EUR/USD also wavered after the encouraging Spanish consumer inflation data. The statistics agency said that the country’s inflation dropped by 0.1% in May, translating to a year-on-year increase of 3.2%. This means that Spain’s inflation is nearing the target of the ECB.

Looking at the economic calendar, there will be several important numbers to watch on Wednesday. Germany will publish May’s jobs and preliminary consumer inflation data. Christine Lagarde will talk and possibly provide more hints about what to expect in June. In the US, the Federal Reserve will publish its beige book.
 

EUR/USD forecast

The EUR/USD pair drifted downwards after the better-than-expected US consumer confidence and housing data. It reached a low of 1.0670, the lowest point since March. On the 4H chart, the downward trend is supported by the 25-period moving average and the 61.8% Fibonacci Retracement level.

The MACD indicator seems to be forming a bullish divergence pattern, which is a positive sign for the pair. It also formed a small hammer pattern. Therefore, the EUR/USD pair will likely bounce back as buyers target the next psychological level of 1.0800 followed by 1.0835.

(Click on image to enlarge)

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