EUR/USD – The Pair Price May Drop With The Bearish Sentiment Prior To The Inflation Numbers

My FX List
August 1, 2023

Long Position

  • Take Profit: 1.0960
  • Stop Loss : 1.1075
  • Timeline: 1-2 days

Short Position

  • Buy Stop : 1.1048
  • Take Profit: 1.1100
  • Stop Loss : 1.0970

The major pair was spotted trading at 1.1018 on Monday morning, which was a touch higher than the week’s low of 1.0945. Trades appeared to be moving slowly as they tried to determine how the recent ECB and Federal Reserve pronouncements might affect them. Rates were increased by 0.25% by both US and EU to combat the excessive inflation in the economies. However, the rate increases may finally come to a halt now that we are starting to see a decline in inflation rates. On Friday, the US PCE index was also released. Given the Federal Reserve would consider it, this information was noteworthy for traders. It was 3.1% in June while the Core PCE recorded a decline to 4.1%.

Another reason for analysts to predict a pause in rate hikes in the coming months is the data release. The German Import Price Index will be the next set of figures to be anticipated. Evidently, the index had fallen by 9.1% in the previous report, and economists predict that it would fall by 14.7% in June. According to experts, Germany’s retail sales figures, which have not yet been released, might show symptoms of weakening. Following the announcement of the actual statistics, the slump in the EU economy might become apparent. Additionally, the European preliminary CPI data will be released, which is equally important for the pair. When compared to June, when the headline CPI was 5.5%, economists anticipate that it might have dropped to 5.3% in July.

However, because they won’t be made public until after the ECB decisions, these numbers won’t yet have much of an impact. In technical analysis, the pair price formed a bearish crossover and turned the crucial support level of 1.1073 into resistance, illustrating the impact of Fed and ECB decisions on price charts as well. This makes it significant because it was also the highest price in April. The middle and lower lines of the Bollinger Bands also moved, with the pair moving under the 50 period MA. Therefore, the EUR/USD pair has an overall bearish sentiment indicating the possibility of a downtrend.

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