Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1450.
Add a stop-loss at 1.1600.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1600.
Add a stop-loss at 1.1450.
The EUR/USD exchange rate continued its strong downward trend as the US dollar, crude oil, and bond yields rallied ahead of the Federal Reserve interest rate decision. It slipped to 1.1540, its lowest level since August 14 this year. It has dropped by 1.50% from its highest point this month.
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US Dollar, Crude Oil, and Bond Yields are Rallying
The EUR/USD pair slipped substantially as investors rushed to the safety of the US dollar as risks rose. The dollar index rose to 99.63, its highest level since September 2nd and much higher than this month’s low of 98.58.
Crude oil prices continued soaring, with Brent nearing the important resistance level of $110. The West Texas Intermediate (WTI) rose to $106, pushing gasoline and diesel prices higher. The average gasoline price jumped to $4.32, while diesel jumped to $6.2, a few days after it crossed the psychological level of $6.
US bond yields also continued rising. The ten-year crossed the important milestone of 5%, while the 30-year hit 5.367%. These metrics are rising as the Federal Reserve prepares to deliver its interest rate decision.
Economists expect the bank to hike interest rates by 0.25% in this meeting, a move that will infuriate President Donald Trump, who believes that the benchmark rate should be between 0.5% and 1%.
Data released last week showed that the headline and core consumer price index remained above 2% last month. Another report showed that the unemployment rate remained at 4.1%, while the economy added over 162k jobs.
The EUR/USD pair is also reacting to the rising European bond yields. In Germany, the ten-year yield rose to 3.55%, its highest level in years. Similarly, in France, the ten-year has risen in the last five consecutive days and is hovering at its highest point in years.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has slipped in the past few weeks, moving from a high of 1.1711 to the current 1.1541. It has dropped below the important support level of 1.1565, its lowest level on September 2.
The pair has already crossed the 50-day moving average and the Supertrend indicator. At the same time, the Relative Strength Index (RSI) has dropped and moved below the neutral zone of 50.
Therefore, the pair will likely continue falling in the coming days. If this happens, the next key target to watch will be at 1.1450.
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