EUR/USD Forex Signal: Sell-Off Increases
- Sell the EUR-USD pair and set a take-profit at 1.0500.
- Add a stop-loss at 1.0656.
- Timeline: 1-2 days.
- Bullish view
- Set a buy-stop at 1.0627 and a take-profit at 1.0690.
- Add a stop-loss at 1.0500.
The EUR/USD fell further as the Fed minutes underscored Wall Street's concerns about the path of interest rate hikes. It fell to 1.060, its lowest level since January 6 of this year, as the US dollar index resumed its comeback. The Fed's minutes indicate that more rises are on the way.
The EUR/USD fell to its lowest level in more than a month after the Fed released meeting minutes. According to the minutes, all members of the committee agreed with the modest raise made by the bank.
At the same time, they all agreed that additional raises were needed to combat inflation, which is a thorn in the Fed's side. According to the minutes:
"Participants observed that a tight policy stance would need to be maintained until incoming data provided confidence that inflation was on a sustained downward path to 2%, which would most likely take some time."
The hawkish tone in the minutes is striking given that the meeting took place before the US released good statistics. According to these figures, the country's unemployment rate fell to 3.4%, while inflation fell slightly to 6.4%.
On Thursday, there will be numerous key economic reports. Eurostat will provide the final reading of January's inflation figures. Analysts anticipate that the headline CPI will rise from 8.5% to 8.6% throughout the month, based on preliminary estimates. The core CPI is predicted to be steady at 5.2%. The ECB, like the Fed, is mulling larger rate rises.
The EUR/USD will also be affected by the imminent US GDP figures. In most circumstances, the second estimate of the GDP figure has little influence on the pair because the difference from the first is typically not that large. Analysts anticipate that the economy increased by 2.9% in Q4. Forecast for the EUR/USD
In recent days, the EUR/USD pair has been strongly negative. The sell-off escalated following the release of the FOMC minutes. When it fell, it fell below the critical support level of 1.0615, its lowest position since February 17. It also fell below a crucial support level of 1.0656. (Feb 10 low). In addition, the pair fell below the 50-period moving average and the Ichimoku cloud.
As a result, the prognosis is bearish, with 1.0500 as the next reference level to monitor. This trade's stop-loss will be set at 1.0650.