The outlook of the pair is neutral with a bearish bias.
- Set a sell-stop at 1.0680 and a take-profit at 1.0600.
- Add a stop-loss at 1.0740.
- Timeline: 1-2 days.
- Set a buy-stop at 1.0715 and a take-profit at 1.0825.
- Add a stop-loss at 1.0645.
The EUR/USD price made a small hammer pattern even as more Federal Reserve officials sounded more hawkish. It rose to 1.0700, a few points above last week’s low of 1.0610. It remains significantly below the highest point this year.
Fed officials more hawkish
Federal Reserve officials turned more hawkish last week after the strong economic data from the United States. Numbers published earlier this month showed that the American economy added over 504k jobs in January while the jobless rate crashed to 3.4%, the lowest level since 1953.
And on Tuesday last week, data published by the Bureau of Labor Statistics revealed that the country’s inflation remained stubbornly high. The headline and core inflation rose on a month-on-month basis. Further, retail sales jumped by 3% in January, the biggest increase in months.
Therefore, analysts believe that the Fed has room for more rate increases in the coming months. In separate statements, Fed hawks like James Bullard and Loretta Mester supported more increases. Mester even supported a 0.50% increase in its March meeting.
Wall Street analysts are now adjusting their outlook for the Federal Reserve. In separate notes, analysts at Goldman Sachs and Bank of America said that the bank will continue hiking until June this year if inflation remains this high.
There will be no important economic data from the European Union and the United States on Monday. As such, traders will focus on the upcoming Federal Reserve minutes scheduled for Wednesday. These minutes will provide more information about the FOMC’s deliberations in its recent meeting.
The EUR/USD pair will also react to the upcoming retail earnings season. Some of the top American retailers that will publish their results are Walmart, Target, Lowe’s, and Home Depot. Their results are usually used as a gauge for the American economy.
The EUR/USD pair formed a hammer pattern on Friday. In candlestick analysis, this pattern is usually a bullish sign. The lower side of the hammer pattern coincided with the first support of the Woodie pivot point. It is now hovering at the pivot point. The pair remains below the 50-period exponential moving average.
Therefore, the outlook of the pair is neutral with a bearish bias. More downside will be confirmed if it moves below last week’s low of 1.0610. The stop-loss of this trade will be at the first resistance point at 1.0745.