Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0215.
- Add a stop-loss at 10400.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0415 and a take-profit at 1.0500.
- Add a stop-loss at 1.0275.
The EUR/USD price staggered on Wednesday evening after the Federal Reserve Chairman hinted at possible pivoting in the upcoming meetings. It was trading at 1.0350, which was slightly below its November high of 1.050. In all, the pair had its second consecutive monthly gain and the best performance since July 2020.
Fed pivot ahead?
The EUR/USD pair moved sideways after the US published mixed economic numbers and after the Fed Chair pointed to pivoting. On Wednesday, data showed that the economy expanded by 2.9% QoQ in the third quarter. That increase was better than the median estimate of 2.7%. This increase happened as exports and consumer spending boomed.
Additional data by the Bureau of Labor Statistics showed that the American economy had over 10.3 million job vacancies in October. On the other hand, a report by ADP revealed that the private sector created just 127k jobs in November, significantly lower than the previous 239k.
These jobs numbers came two days before the US is scheduled to publish its official NFP numbers. Economists expect the data to show that the economy added about 200k jobs in November while the unemployment rate dropped to 3.6%.
The main catalyst for the EUR/USD during the American and Asian sessions was a speech by Jerome Powell. In it, he signaled that the Fed was track to hike interest rates by 0.50% in December. That will be a smaller increase than the 0.75% it has implemented in the past four meetings.
He said that the smaller rate increase will be needed since the bank has already hiked by 400 basis points this year.
Elsewhere, data from Europe revealed that inflation moderated at a faster pace than expected as natural gas prices eased. It dropped from 1.5% in October to -0.1% in November from the previous 1.5%. Core inflation remained unchanged at 5.0% YoY.
EUR/USD forecast
The EUR/USD price moved sideways after Jerome Powell’s statement since it was in line with what most analysts were expecting. On the 4H chart, it has formed a double-top pattern whose neckline is at 1.0225. The pair is also hovering at the 25-day and 50-day moving averages. It is also at the Woodie pivot point.
Therefore, because of the double-top pattern, it will likely have a bearish breakout as sellers target its neckline at 1.0215.
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