Inverted C&H and Rising Wedge Patterns

[ad_1]

There is a likelihood that the pair will have a pullback in the next few days.

Bearish View

  • Sell the EUR/USD pair and set a take-profit at 1.0450.
  • Add a stop-loss at 1.065.
  • Timeline: 1-3 days.

Bullish View

  • Set a buy-stop at 1.0600 and a take-profit at 1.0670.
  • Add a stop-loss at 1.0525.

The EUR/USD pair tilted upwards as the Federal Reserve testified before Congress. The pair rose to a high of 1.0610, which was the highest point since Friday last week. It has jumped by more than 2% from its lowest point this week.

Advertisement

Jerome Powell on Fed Actions

EUR/USD and American stocks jumped as Jerome Powell testified before a Senate committee. At the same time, bond yields dropped for the second day straight, with the 10-year and 30-year falling to 3.14% and 3.2%, respectively.

In his statement, Powell said that the Fed will continue hiking interest rates until there is evidence that inflation was falling towards its 2% target. At the same time, he lamented that the labor market was extremely hot and that tightening could lead to a recession.

Analysts believe that a recession is inevitable. A poll by the Wall Street Journal showed that the possibility of a recession was 44%. Most of the economists polled cited the rising consumer inflation, low unemployment rate, and the ongoing supply chain challenges.

Still, there are some positives. The price of crude oil has slumped from $124 to less than $110. Natural gas prices have also retreated while the price of some food products have continued falling. Therefore, there is a likelihood that inflation has reached its peak.

The next key driver for the EUR/USD pair will be the testimony by Jerome Powell. Still, historically, the second day of Fed chair’s testimony does not have a major impact on currencies and stocks.

Meanwhile, Markit, a company owned by S&P Global will publish the latest flash manufacturing and services PMI numbers. Analysts expect the data to show that business activity in Europe and the US weakened slightly as inflation surged.

EUR/USD Forecast

The EUR/USD pair continued rising after the latest statement by Jerome Powell. On the four-hour chart, the pair has formed an ascending channel that is shown in purple. It is now along the upper side of this channel. At the same time, the pair has formed an inverted cup and handle pattern. The current rebound is part of the handle pattern.

Therefore, there is a likelihood that the pair will have a pullback in the next few days. If this happens, the next key level to watch will be the lower side of the cup at 1.0365.

EUR/USD

[ad_2]

Leave a Reply

Your email address will not be published. Required fields are marked *

Risk warning: Trading Forex (foreign exchange) or CFDs (contracts for difference) on margin carries a high level of risk and may not be suitable for all investors. There is a possibility that you may sustain a loss equal to or greater than your entire investment. Therefore, you should not invest or risk money that you cannot afford to lose. Before using xMetaMarkets services, please acknowledge all of the risks associated with trading.

The content of this website must not be construed as personal advice. We recommend that you seek advice from an independent financial advisor.

The information on this website is not directed to residents of certain jurisdictions such as United States, Canada, Iran, Cuba, France, and some other regions, and is not intended for distribution to, or use by, any person in any countries or jurisdictions where such distribution or use would be contrary to local law or regulation.

© 2018 - 2024 xMetaMarkets.com. All Rights Reserved.