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Stuck in a Range Ahead of a Breakout


The next important EUR/USD news will be the upcoming US consumer inflation data scheduled for Wednesday.

  • Buy the EUR/USD pair and set a take-profit at 1.0900.
  • Add a stop-loss at 1.100.
  • Timeline: 1-2 days.
  • Set a sell-stop at 1.0990 and a take-profit at 1.0900.
  • Add a stop-loss at 1.1050.

The EUR/USD pair moved sideways after the Federal Reserve and the European Central Bank (ECB). The pair was trading at 1.1020, where it has been in the past few days. It has jumped by over 4% from the lowest point in March.

The EUR/USD pair has been in a tight range after the Federal Reserve and the ECB decided to hike interest rates by 0.25%. In its statement, the Fed hiked by 0.25%, bringing rates to 5.25% while the ECB brought rates to 3.25%.

There is a likelihood that the Federal Reserve has reached the peak of rate hikes considering that the American economy is slowing. Data published recently showed that the American economy slowed down in the first quarter.

On a positive sign, data released on Friday showed that the American economy created thousands of jobs in April. The economy added over 253k jobs in April while the unemployment rate dropped to 3.4%, the lowest level since 1969. Wages continued rising even as the economy continued slowing down.

Meanwhile, the ECB decided to hike interest rates by 0.25% and hinted that it will continue hiking rates in the coming months. In a statement, Klaas Knot, a member of the ECB governing council, said that the bank will continue rising borrowing costs as long as the underlying inflation hasn’t been tamped down. He pointed that the bank has more ground to cover.

Europe’s inflation has remained at an elevated level in the past few months. Core inflation, which excludes the volatile food and energy prices, rose to 5.6% in April. That figure is much higher than the ECB target of 2.0%.

The next important EUR/USD news will be the upcoming US consumer inflation data scheduled for Wednesday.

The EUR/USD exchange rate has been in a tight range in the past few days. It has moved above the ascending trendline shown in orange. The pair has moved to the 25-period and 50-period moving averages. It has also moved slightly below the key resistance point at 1.1088 while the MACD has moved to the neutral point.

The pair has formed an ascending triangle pattern. Therefore, the pair will likely have a bullish breakout as buyers target the next psychological level at 1.0900.

EUR/USD

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