Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1650.
Add a stop-loss at 1.1450.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1450.
Add a stop-loss at 1.1650.
The EUR/USD pair was unchanged on Wednesday, continuing a performance that started on July 31 after the last Federal Reserve interest rate decision and US Personal Consumption Expenditure (PCE) report. It was trading at 1.1542, a few points below this month’s high of 1.1580.
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German, Italian, and US Inflation Data Ahead
The EUR/USD pair has moved sideways in the past few days, and this performance may end after the US and key European countries release their key metrics. In Europe, Germany and Italy will release their July consumer inflation reports.
Economists expect the headline Italian consumer price index (CPI) to come in at 2.8%, lower than the previous month’s 3.0%. In Germany, the figure is expected to move from 2.3% in June to 2.8% in July.
These numbers, together with the upcoming European inflation report, will help the European Central Bank (ECB) when making the next rate decision. The bank has already hiked rates this year, with odds showing that it will leave them unchanged for the remainder of the year.
The other notable EUR/USD news to watch will be the upcoming US Consumer Price Index (CPI) report, which will provide more color on the impact of last month’s escalation between the US and Iran. Economists expect the report to show that the headline CPI slipped from 3.5% in June to 3.4% in July. Core CPI is expected to come in at 2.5%, remaining stubbornly above the 2% target of the Federal Reserve.
The pair will also react to the new developments in the Middle East that have pushed oil prices higher, with Brent and the West Texas Intermediate (WTI) moving to $90 and $84, respectively. These prices rose even as Pakistan hinted that a potential deal to reopen the Strait of Hormuz was close.
EUR/USD Technical Analysis
The EUR/USD pair jumped sharply after the recent Federal Reserve interest rate decision and after the US released the June PCE report. It has been in a consolidation phase since then.
The pair is in the process of forming a bullish flag pattern, a common continuation sign in technical analysis. It is now in the flag section of this pattern. Also, it had previously formed a double-bottom pattern.
The pair has also jumped above the 50-day moving average. Therefore, the pair will likely have a bullish breakout in the next few days, with the next key target to watch being at 1.1650.
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