Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0300.
- Add a stop-loss at 1.0500.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0400 and a take-profit at 1.0500.
- Add a stop-loss at 1.0300.
The EUR/USD exchange rate retreated on Monday morning, continuing a trend that started last week when it jumped to a high of 1.0508. It retreated for three consecutive days, reaching its lowest level since February 12, and 1.55% from its highest level in February.
The EUR/USD pair will be in focus this week as the United States and Europe publish key economic numbers. Europe will be the first one to go as it will release the preliminary consumer price index (CPI) data for February on Monday.
Economists polled by Reuters expect the data to show that the headline consumer price index (CPI) fell from 2.5% in January to 2.3% in February, while the core CPI, which excludes the volatile food and energy prices fell from 2.7% to 2.5%.
S&P Global and its partnering institutions will publish the flash manufacturing and services PMI data. The consensus view is that the Eurozone manufacturing PMI rose fromm 46.6 in January to 47.3 in February. While a PMI data below 50 is a sign of contraction, an increase is a sign that a sector is doing well.
The S&P manufacturing PMI figure from the US is expected to show that the sector improved to 51.6 in January. A separate report by the Institute of Supply Management (ISM) is expected to show that the PMI figure rose to 50.6. These numbers mean that the US manufacturing sector is doing well.
The key data to watch this week will be the nonfarm payroll (NFP) data from the US, which will provide more data about the economy. This report will come a week after the US published encouraging personal consumption expenditure (PCE) data.
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EUR/USD technical analysis
The daily chart shows that the EUR/USD pair retreated for three consecutive days, a trend that started when it peaked at 1.0505, where it formed a double-top pattern. It has pulled back below the 23.6% Fibonacci Retracement level.
The pair has moved below the 50-day moving average, while oscillators like the Relative Strength Index (RSI) and the MACD have all pointed downwards. Also, the two lines of the percentage price oscillator have made a bearish crossover.
Therefore, the pair will likely continue falling as sellers target the key psychological point at 1.0300. More upside will be confirmed if it rises above the key resistance level at 1.0500.
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