Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1325.
Add a stop-loss at 1.1500.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1500.
Add a stop-loss at 1.1325.
The EUR/USD pair wavered on Wednesday morning as traders reacted to the latest US trade numbers and waited for the upcoming minutes of the last Federal Reserve minutes. It retreated to 1.1423, a few points below this month’s high of 1.1472.
FOMC to Publish Minutes of the Last Meeting
The EUR/USD pair retreated slightly after the US published the latest trade numbers. A report by the Commerce Department showed that exports dropped from $328 billion in April to $317 billion in May. Imports rose from $382 billion to $395 billion, pushing its trade deficit to over $77 billion.
The next important catalyst to watch will be the upcoming Federal Open Market Committee (FOMC) minutes that will come out later today. These minutes will provide more information about the last meeting, in which officials decided to leave interest rates unchanged between 3.50% and 3.75%.
The most important aspect of the meeting was the dot plot, which showed that nine committee members signaled that they will support rate hikes later this year to combat inflation.
Officials are worried about inflation that has remained above the 2% target in the past five years. While energy prices have retreated in the past few weeks, service inflation remains at an elevated level. The US will publish the latest consumer inflation data next week.
The EUR/USD pair is also reacting to several political events in Europe. For example, in France, Marine Le Pen said that she will run for president in the 2027 election. In Germany, the government unveiled its budget, which hiked defense and investment spending. Its defense spending will surge to over $228 billion by 2030.
The European Central Bank (ECB) will publish minutes of the next meeting on Thursday, while several Fed officials like Christopher Waller and John Williams will talk.
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EUR/USD Technical Analysis
The EUR/USD pair pulled back to 1.1416 on Wednesday as traders waited for the FOMC minutes. It has formed a bearish flag pattern, which is made up of a vertical line and an ascending channel. This pattern often leads to a bearish breakout.
The current level is at an important level because it coincides with the lowest swing in March. It has also remained below the 50-day and 100-day moving averages.
Therefore, the path of the least resistance is bearish, with the next target to watch being the year-to-date low of 1.1323, its lowest point in June.
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