Introduction to EUR/USD Exchange Rate
The EUR/USD exchange rate has been under pressure lately, retreating for three consecutive days and moving below a crucial support level after the latest European Central Bank (ECB) and Federal Reserve interest rate decisions. It dropped to a low of 1.1535, down from the year-to-date high of 1.1918.
Federal Reserve and ECB Decisions
The Federal Reserve delivered its consecutive interest rate cut as most analysts were expecting. However, the decision was more hawkish than expected, with officials remaining concerned about inflation. As a result, Jerome Powell noted that the bank will not commit to cutting the interest rate in the last meeting of the year. The European Central Bank, on the other hand, delivered a mild interest rate decision, leaving interest rates unchanged. The bank believes that the economy is in a good place with inflation and economic growth being balanced.
Economic Performance
The ECB decision came after a report showed that the bloc’s economy expanded by 0.2% in Q3 from the previous quarter, a sign that the bloc is doing well. The bloc’s inflation also rose to 2.2% in September from the previous 2%. Looking ahead, the EUR/USD pair will react to the upcoming European and US manufacturing PMI numbers, which will provide more color about the economic performance in October. The pair will also react to the upcoming private payrolls data by ADP, which will come out on Wednesday.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair remained on edge after the latest Fed and ECB decisions. It dropped to a low of 1.1535, its lowest level since August 1. The pair has also moved below the lower side of the symmetrical triangle pattern. It also dropped below the 50-day moving average, while the Relative Strength Index has pointed downwards. Therefore, the pair will likely continue falling as sellers target the next key support at 1.1400, its lowest point on August 1.
Trading Strategies
For those looking to trade the EUR/USD pair, there are two possible strategies:
- Bearish view: Sell the EUR/USD pair and set a take-profit at 1.1400. Add a stop-loss at 1.1625. The timeline for this trade is 1-2 days.
- Bullish view: Buy the EUR/USD pair and set a take-profit at 1.1625. Add a stop-loss at 1.1400.
Conclusion
In conclusion, the EUR/USD exchange rate is under pressure after the latest Fed and ECB decisions. The pair has dropped to a low of 1.1535 and is likely to continue falling as sellers target the next key support at 1.1400. Traders can consider either a bearish or bullish view, depending on their analysis of the market. It is essential to keep an eye on upcoming economic reports, including the European and US manufacturing PMI numbers and the private payrolls data by ADP, as they will provide more insight into the economic performance and impact the EUR/USD pair.
