Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.0960.
• Add a stop-loss at 1.0800.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 1.0850 and a take-profit at 1.0755.
• Add a stop-loss at 1.0900.

The EUR/USD exchange rate is loitering near the highest point since September 1st as traders reflected on key US economic data. The pair jumped to a high of 1.0890 on Wednesday, much higher than the year-to-date low of 1.0445.
 

Key US economic data ahead

The EUR/USD rally took a breather during the American and Asian sessions as traders reflected on the recent US economic data. On Tuesday, the country released encouraging inflation data.

US inflation, which peaked at a 40-year high of 9.1% in 2022, has now dropped to 3.2%. Core inflation also retreated from 4.2% in September to 4.0% in October. This is a sign that the Fed is managing to engineer a soft landing of the economy.

The US also released better-than-expected retail sales numbers. The volume of retail sales dropped by 0.1% in October, better than the estimated decline of 0.3%. Core sales rose by 0.1%, higher than the expected drop of 0.2%.

The implication of these numbers is that the Federal Reserve will likely hold interest rates at the current level in the coming meetings. If inflation continues falling, there is a likelihood that the bank will start cutting them in 2024.

Several Federal Reserve officials will make headlines on Thursday as they talk about the recent numbers and what to expect. They include John Williams, the head of New York Federal Reserve, Loretta Mester, and Christopher Waller. In a statement on Wednesday, Mary Daly of San Francisco Fed maintained that inflation was still higher than the target of 2.0%.

The EUR/USD pair also moved sideways after the latest estimate of European GDP data. According to the European Commission, the bloc’s economy is expected to improve by 1.3% in 2024 and then recover by 1.7% in 2025. The estimate came as data revealed that the industrial producton fell by 1.1% in September leading to a YoY drop of 6.9%.
 

EUR/USD technical analysis

The EUR/USD exchange rate pulled back slightly after the weak European industrial production data. It retreated from this week’s high of 1.0890 to a low of 1.0843. It pulled back below the key support level at 1.0861, which was the 50% Fibonacci Retracement level.

The pair remains above the upper side of the widening wedge pattern. It has also jumped above the 50-day moving average. Therefore, it will likely resume the bullish trend as buyers target the 61.8% retracement point at 1.0960.

(Click on image to enlarge)

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