EUR/USD Forex Signal: Currently Stuck in a Tight Range
Bullish view
- Buy the EUR/USD pair and add a take-profit at 1.1200.
- Set a sell-stop at 1.0800.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0830 and a take-profit at 1.0700.
- Add a stop-loss at 1.0950.
Following the release of dismal economic statistics, investors proceeded to read the tea leaves of the Federal Reserve (Fed) and the European Central Bank (ECB). The EUR/USD exchange rate has been locked around 1.0881 for the majority of this week. This price is around 3.86% higher than 2023 low.
Business activity in the EU and the US
According to data released on Tuesday, corporate activity in Europe and the United States is still under pressure this year. Both nations' manufacturing and services PMIs stayed below 50 in January, indicating that they are currently in a contractionary condition.
In Europe, the manufacturing PMI was 48.8, up from 49.8 the previous month. The composite PMs in France and Germany were 49 and 49.7, respectively. On the plus side, these figures suggested that commercial activity in the region was improving, aided by comparatively cheap natural gas costs. Gas prices have dropped to their lowest level in over two years.
Business activity in the United States remained subdued, with manufacturing and services PMI numbers falling below 50. These figures backed up what we've seen in recent weeks when some of the country's largest corporations announced massive layoffs. The multinational corporation 3M lay off nearly 2,500 people.
Alphabet, Microsoft, and Meta Platforms have also laid off thousands of employees. Rate rises will continue, according to ECB and Fed officials. Lael Brainard, the Fed Vice Chair, has stated that the bank will continue to raise rates until there is sufficient evidence that inflation is declining. The ECB's Chief Economist, Philip Lane, held the same opinion.
Forecast for the EUR/USD
In recent months, the EUR/USD exchange rate has been steadily rising. On January 12, it managed to break through 1.0740. This was an important level since it was the upper half of the rising triangle pattern depicted in red. It has been above this level for about two weeks. The incredible oscillator has passed through the neutral point.
As a result, we may estimate that the pair has a greater upside in the short term by calculating the distance between the hypotenuse and the top side of the triangle. More advances are expected to push the pair up to the important milestone of 1.1050.