In the event of a downward trend
In the case of an upward trend
- Set the buy stop order at 1.0755 and the take profit order at 1.0800.
- Set the stop loss order at 1.0700.
EUR/USD fell slightly as the outlook for the European economy worsened. It fell to 1.0676, its lowest since May 14. It is still regarding 1% below the May high.
EU Economic Outlook
The European Union’s economic outlook worsened on Tuesday following the bloc unveiled measures to phase out Russian oil imports. The bloc countries will still receive Russian oil that flows through the pipelines.
Perhaps the most important limitation in securing oil freight is because European companies have a strong market share in the industry. The bloc will prevent its companies from insuring Russian shipments.
These announcements came on the same day that European countries released strong consumer price inflation data. According to Eurostat, the inflation rate in the bloc has risen to the highest level ever recorded. She blamed this trend on rising energy and food costs.
Therefore, higher inflation will put more pressure on the European Central Bank (ECB) as it considers raising interest rates. Most economists expect the bank to raise rates by 0.25% at the July meeting and then exit negative rates in September.
EURUSD is also reacting to relatively positive data from the US. On Tuesday, data showed that home prices jumped to a record high in March. Case-Shiller home price index rose 20% year-over-year in March. This indicates that the housing market remains hot despite showing signs of weakness.
Meanwhile, Conference Board data revealed that consumer confidence fell from 108.6 in April to 106.4 in May. This drop was better than the median estimate of 103.9. The focus now turns to the upcoming job numbers to be released in the next three days.
The US will release JOLTs vacancy numbers on Wednesday followed by initial jobless claims and NFPs on Thursday and Friday, respectively.
Forecast for the EUR/USD currency pair
The 3-hour chart is showing that the EURUSD has formed an uptrend wedge pattern that is shown in black. In price action analysis, this pattern is usually a bearish signal, which explains the reason for the breakout to the downside on Tuesday. The pair is still above the important support level 1.0640 which was the highest point on May 5th.
EURUSD remains above the 50-period moving average. Therefore, due to the wedge pattern, the pair is likely to retest the support at 1.0640.
