Consolidation as focus shifts to FOMC

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The pair will likely resume the downtrend as investors await the Fed’s next move.

Bearish view

  • Sell ​​the EUR/USD pair and set a take-profit at 1.0500.
  • Add a stop-loss at 1.0280.
  • Deadline: 1 day.

Bullish view

  • Set a buy-stop at 1.0275 and a take-profit at 1.0360.
  • Add a stop-loss at 1.0165.

The EUR/USD pair struggles to orient itself as investors focus on the latest interest rate decision from the European Central Bank (ECB). The pair is trading at 1.0251, which is slightly below last week’s high of 1.0278 as attention turns to upcoming data on US consumer confidence and the Fed’s decision. .

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US consumer confidence and FOMC decision

The EUR/USD price moved sideways after the latest ECB decision. The bank decided to make its first interest rate hike in more than a decade. It raised rates by 0.50%, which was bigger than most analysts expected.

The bank also hinted that it will continue to hike rates in the coming months as it continues to battle rising inflation in the region. It also ended its quantitative easing program.

The pair also moved sideways as Italy, the region’s third largest economy, entered political turmoil. The country’s respected prime minister and former ECB governor, resigned as challenges in his administration continued. This means the country will likely be heading for another election later this year.

The next key catalyst for the EUR/USD pair will be the upcoming US Consumer Confidence data which is scheduled for Tuesday. Economists expect data to show confidence fell to 97.3 in July as inflation continued to rise. It has fallen from a peak of 125.1 reached last year. On the same day, the United States will release the latest new home sales and housing price index data.

The most important event this week will be the Federal Reserve’s next interest rate decision. Analysts expect the Fed to continue raising interest rates this week. It should increase by 0.75% or even 100 basis points. Finally, the US will release the first reading of Q2 GDP data.

EUR/USD Forecast

The four-hour chart shows the EUR/USD pair trending higher after falling to parity this month. It reached the important resistance level of 1.0275, which was the highest level since July 6th.

The pair is trading between the 23.6% and 38.2% Fibonacci retracement levels. It is also slightly above the first level of standard pivot point resistance. The pair will likely resume the downtrend as investors await the Fed’s next move. If that happens, the next key support to watch will be at 1.0050.

EUR/USD

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