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Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.1835.
• Add a stop-loss at 1.1500.
• Timeline: 1-3 days.

Bearish view

• Sell the EUR/USD pair and a take-profit at 1.1500.
• Add a stop-loss at 1.1835.

(Click on image to enlarge)

The EUR/USD exchange rate remained in a tight range ahead of the upcoming European consumer price index (CPI) data and minutes of the last FOMC monetary policy meeting. It was trading at 1.1645, down from last week's high of 1.1730.

European Inflation and FOMC Minutes

The EUR/USD exchange rate wavered as market participants waited for the European consumer inflation report, which will have an impact on the next European Central Bank (ECB) meeting.

Economists expect the upcoming data to show that the headline remained unchanged at 2%, while the core inflation was stuck at 2.3%. If these estimates are accurate, chances are that the ECB will opt to maintain interest rates unchanged in the coming meeting.

Unlike the Fed, the ECB has been highly dovish in this cycle, moving interest rates to 2% and hinting to more cuts as the bloc reacts to the trade war with the United States.

The other major catalyst for the EUR/USD pair will be the upcoming FOMC minutes of the last meeting, in which officials decided to leave interest rates unchanged between 4.25% and 4.50%.

The minutes will come two days before Jerome Powell delivers his first remarks since the US published the latest jobs and inflation data. In its decision, the Bureau of Labor Statistics (BLS) said that the economy created just 73k jobs. It then downgraded the previous month’s report, leading to the firing of its leader.

The BLS has then published more economic data that will have an impact on the next monetary policy meeting. The report showed that the US inflation was heading in the wrong direction, a situation that could worsen as the impact of Donald Trump's tariffs emerges.

Therefore, his statement will be important as it will provide more information about the next meeting.

EUR/USD Technical Analysis

The EUR/USD exchange rate has moved sideways in the past few weeks. It has remained below the descending trendline that connects the highest swings since July 1.

The pair has remained slightly above the 50-day Exponential Moving Average (EMA). It has also formed an inverse head and shoulders pattern, which often leads to more gains.

Therefore, it will likely have a strong bullish breakout, with the next point to watch being the year-to-date high of 1.1835. A drop below the support at 1.1600 will invalidate the bullish forecast.

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