The EUR to USD pair has been in a strong downward trend after peaking at 1.1095.
- Sell the EUR/USD pair and set a take-profit at 1.0580.
- Add a stop-loss at 1.0750.
- Timeline: 1-2 days.
- Buy the EUR/USD pair and set a take-profit at 1.0750.
- Add a stop-loss at 1.0600.
The EUR/USD forex pair downward trend continued after a series of encouraging European consumer inflation data. The pair slipped to a two-month low of 1.0633. In all, the pair had its worst month this year as the US dollar index rebounded.
Economic data published this week showed that European inflation was moving in the right direction. On Tuesday, numbers by the Spanish statistics agency showed that the country’s inflation plunged to the lowest level in over 2 years. The headline inflation in the country dropped to 2.9% in May.
The same trend happened in France and Germany. In France, the headline consumer inflation figure dropped by 0.1% from April to May. It dropped to 5.1% on a year-on-year basis. Meanwhile, in Germany, the headline inflation fell by 0.1% and by 6.1% on a year-on-year basis.
Therefore, there is a likelihood that the upcoming consumer inflation figures will show that the bloc’s prices dropped in May. The median estimate is that general inflation rose by 0.6% in May and by 7.0% on a YoY basis.
These numbers show that the actions by the European Central Bank (ECB) are working. Still, since inflation remains above the 2.0% target, there is a likelihood that the bank will continue hiking interest rates in the coming months. Analysts have penciled at least two more hikes this year.
The EUR/USD pair will next react to the upcoming US jobs numbers. ADP will publish its estimate of the private non-farm payrolls (NFP) data. Economists expect that the economy added 235k jobs in May after adding 296k in the previous month. The ADP numbers will come a day ahead of the upcoming US non-farm payrolls (NFP) data.
The EUR to USD pair has been in a strong downward trend after peaking at 1.1095. It has formed a descending channel shown in green. The pair has moved below the 50-period moving average and the Ichimoku cloud indicator. Further, it has dropped below 1.0713, the lowest swing on March 24.
The Average Directional Index (ADX) has been in a downward trend, signaling that the downward trend is fading. The pair will likely continue falling, with the next target being at 1.0585, the lowest side of the descending channel. A bullish breakout above 1.0750 will signal that the bearish trend has ended.
Ready to trade our daily Forex signals? Here’s a list of some of the best Forex trading platforms to check out.