Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.0800.
• Add a stop-loss at 1.0920.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.0855 and a take-profit at 1.0920.
• Add a stop-loss at 1.0800.

(Click on image to enlarge)

The EUR/USD exchange rate has crawled back in the past two trading days as the path of a Federal Reserve interest rate cut became clearer. The pair was trading at 1.0855 on Monday morning.

Fed decision, NFP, and consumer confidence data

The EUR/USD exchange rate will be highly volatile this week as the US and Europe publish important economic data and as the Fed delivers its decision.

The first important data will come out on Tuesday when the US publishes the latest consumer confidence report. Economists see the data coming in at 99.8, down from 100.4 in June. This is an important figure because low-confident consumers spend less and vice versa.

The other top data to watch on Tuesday will be the first estimate of European second-quarter GDP data. The average estimate is that the economy grew by 0.2% in Q2 after growing by 0.3% in the previous quarter.

Eurostat will publish the preliminary consumer inflation report for July on Wednesday. Analysts see the headline and core CPI numbers softening at 2.4% and 2.8% in July. While these numbers are important, they will have a limited impact on the European Central Bank (ECB), which is expected to cut rates more this year.

The main EUR/USD news to watch will be the upcoming Federal Reserve interest rate decision. Economists don’t expect the Fed to cut interest rates in this meeting. The consensus is that the bank will welcome the recent US inflation data and decide to cut interest rates in September.

In a recent statement, Jerome Powell noted that the bank was now more focused on the country’s labor market instead of inflation. In this regard, the EUR/USD will react to Friday’s jobs report, which is expected to show that the unemployment rate rose to 4.2% in July.

EUR/USD technical analysis

The EUR/USD pair peaked at 1.0950 in July and has pulled back to 1.0855 ahead of the Fed decision. It has crawled back in the past two days after finding support at the 25-day Exponential Moving Average (EMA).

The pair has formed a symmetrical triangle pattern while the two lines of the MACD have formed a bearish crossover. Therefore, the bearish trend will likely resume in the next few days as sellers target the key support point at 1.0800.

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