Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1300.
Add a stop-loss at 1.1600.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1600.
Add a stop-loss at 1.1300.
The EUR/USD exchange rate continued its recent downtrend on Tuesday as the US-Iran war continued and energy prices jumped. It dropped to 1.1460, its lowest level since March 19, and by 5.25% below the highest point this year.
US Consumer Confidence Drops as Inflation Jumps
The EUR/USD pair has sold off in the past few weeks as the US-Iran war continued, pushing crude oil and natural gas higher. Brent, the global benchmark, jumped to over $115 on Tuesday, while the West Texas Intermediate (WTI) soared to $104.
The rising energy prices mean that the upcoming US consumer confidence dropped to 88 in March from the previous 91.2. A weaker consumer confidence is often a prelude to a weaker US economy.
The US will also publish more macro data, including the JOLTs job openings and the House Price Index report. Economists polled by Reuters expect the upcoming data to show that the job openings dropped to 6.87 million in February from the previous 6.94 million.
These numbers will come a day before the ADP publishes the non-farm payrolls (NFP) report, which is expected to show that the economy created 40k jobs during the month. The Bureau of Labor Statistics (BLS) will publish the latest jobs numbers later this week.
The other key data to watch will be the upcoming European consumer inflation report. Economists expect the data to show that the headline Consumer Price Index (CPI) rose from 0.4% in February to 1.4% in March.
This increase will lead to an annual increase of 2.7%, a big jump from the previous 1.9%. Core inflation, which excludes the volatile food and energy prices, is expected to move from 2.4% to 2.6%.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has slumped in the past few weeks as the US-Iran war has pushed more people to the safe-haven of the US dollar. It has dropped to 1.1460 from the year-to-date high of 1.2090.
The pair has moved below the bearish flag pattern, a common continuation sign in technical analysis. Also, the 50-day and 100-day Exponential Moving Averages (EMA) have formed a bearish crossover pattern.
Therefore, the pair will likely continue falling as sellers target the next important support level at 1.1412, its lowest point in March. A drop below that level will point to more downside, possibly to 1.1300.