The next key catalyst for the EUR/USD price will be the latest European consumer inflation data

Bearish view

• Set a sell-stop at 1.0150 and a take-profit at 1.00.
• Add a stop-loss at 1.0250.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.0235 and a take-profit at 1.0300.
• Add a stop-loss at 1.0150.

The EUR/USD price rose slightly after the Federal Reserve published minutes of the last monetary policy meeting. The pair rose to 1.0200, which was a few points above this week’s low of 1.0120. It remains substantially lower than last week’s high of 1.036.

Fed minutes and EU inflation data

The EUR/USD price tilted upwards after the FOMC published minutes of the past meeting. The minutes showed that some officials judged that it will be necessary to decelerate the pace of interest rate hikes in a bid to evaluate the impact of the past meetings.

Members were worried that the bank could be tightening at a substantially faster pace than is necessary. In that meeting, the committee decided to hike interest rates by 0.75% for the second straight month. It brought the total rate hikes this year to 225 basis points. The minus added:

“As the stance of monetary policy tightened further, it likely would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation.”

A lot has happened since the Fed met in July. Data by the Bureau of Labor Statistics (BLS) showed that the country’s unemployment rate dropped to 3.5%. Further, inflation moderated slightly in July as it dropped from 9.1% to 8.7%.

On Wednesday, data showed that retail sales did well in July. Headline sales rose at an annual pace of 10.1%. Additionally, big retailers like Walmart and Home Depot published results that were better than expected.

The next key catalyst for the EUR/USD price will be the latest European consumer inflation data. Based on the previous estimates, analysts believe that the headline consumer inflation rose to 8.9% while core inflation rose by 4%.

The pair will also react to the latest existing home sales numbers. Economists expect the data to show that sales dropped from 5.12 million to 4.89 million in July. Fed officials like Esther George and Neel Kashkari will also deliver speeches.

EUR/USD forecast

The four-hour chart shows that the EUR/USD price has been in a strong downward trend this week. It managed to move below last week’s high of 1.0366 to a low of 1.0123. The pair has dropped below the 25-day and 50-day moving averages and the ascending purple trendline. It is also between the 23.6% and 38.2% Fibonacci Retracement level. The pair will likely continue falling and retest the crucial parity level at 1.000.

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Pay attention to the US bond market, as the rate differential between the United States and the United Kingdom will continue to drive this pair.

The British pound fell rather significantly from the 1.26 level on Wednesday as we continue to see a lot of negativity. Ultimately, the strengthening US dollar is the main theme for the overall Forex markets as of late, and I think that will continue to be the case. After all, there are a lot of concerns out there that will continue to have people looking for safety, which means the US dollar.

The market breaking above the highs from the last couple of days would be able to sign, but we have to deal with the 50 Day EMA if we were to break above there. A move above that level could open up the possibility of a move much higher, but I think that the 1.30 level is an area where we would see a lot of selling pressure, as it was previous support. Ultimately, this is a market that is in a downtrend, and I think it’s only a matter of time before we would see the weight of the market come into the picture. The 1.30 level is an area that will attract a lot of attention, and I think that would be the top of any type of longer-term relief rally that would happen.

I’m looking for signs of exhaustion, such as the candlestick during the trading session on Wednesday, to get short yet again. Given enough time it’s likely that we will see the market reach the 1.22 level, where we had bounced from previously. If we can break it down below there, then it’s likely that we would see the market reach the 1.20 level underneath. The size of the candlestick for the Wednesday session of course is rather negative, and the fact that we are closing towards the bottom of the candlestick suggests that there could be a bit of follow-through during the trading session on Thursday. Either way, I have no interest whatsoever in trying to get longer this market, at least not until the fundamental situation changes. Right now, it’s obvious to me that the market will continue to struggle, and therefore I am looking for signs of exhaustion in every short-term rally to get involved. Pay attention to the US bond market, as the rate differential between the United States and the United Kingdom will continue to drive this pair.

In general, this is a market that I think will continue to see volatility more than anything else, just like the rest of crypto.

Ethereum fell rather significantly on Monday, initially trying to rally before selling off. The market sliced through the 50-day EMA, as well as the 200-day EMA. The $3000 level is a large, round, psychologically significant figure, which will attract a certain amount of attention. We have bounced ever so slightly from there, but closed toward the bottom of the candlestick, suggesting that we could get a little bit of a continuation from here.

Breaking below the $3000 level could open up a move to much lower levels, possibly even as low as the $2500 level. The $2500 level has been massive support multiple times, so I would think this is an area that a lot of people will be looking to get involved in. That is an area that I think will be crucial for the longer-term strength of Ethereum, and as long as we can stay in that area. That being said, if we were to break down below the $2500 level with any type of significance, the market could go looking to reach the $2000 level.

The size of the candlestick is rather negative as well, as it is much bigger than a previous couple of candlesticks. If we were to turn around and take out the top of the candlestick, it is very possible that the market would go looking to reach the $3500 level. The $3500 level has seen a significant amount of selling pressure, so I think it would take a bit of momentum to send this market above there. If we break above there, then it is possible that we could go to the $4000 level. The $4000 level is an area that has been nasty, so I think it is going to take a lot to get above there.

Ethereum is in the midst of going through a major transformation, and if the switch to “Ethereum 2.0” goes off well, that should help the price of the coin. As more developers jump online, that can only help. However, this is a market that currently looks as if it is ready to break down a bit, at least for the short term. In general, this is a market that I think will continue to see volatility more than anything else, just like the rest of crypto.