The pair will likely remain in this range as traders wait for the upcoming US consumer and producer inflation data.
Sell the EUR/USD pair and set a take-profit at 1.0100.Add a stop-loss at 1.0250.Timeline: 1-2 days.
Set a buy-stop at 1.0235 and a take-profit at 1.0300.Add a stop-loss at 1.0160.
The EUR/USD price moved sideways during the American and Asian sessions as investors focused on the latest spending package by the Senate. The pair was trading at 1.0188, where it has been in the past few days.
EU Energy Crisis
The EUR/USD pair moved sideways after the American Senate voted for Joe Biden’s climate, tax, and healthcare bill. The bill will provide billions of dollars in funding for clean energy projects like wind and solar.
It will also lower some drug prices by letting Medicare negotiate with manufacturers. Most importantly, the bill will be funded by introducing a 15% minimum tax for companies making over $1 billion in sales every year. Also, it aims to raise billions by introducing a 1% tax on share buybacks.
The pair also moved sideways as more Federal Reserve officials warned that the bank will continue hiking interest rates in a bid to fight inflation. In a statement, Mary Daly warned that the bank will continue hiking interest rates in the coming months.
There is no major economic data scheduled from the United States and Europe on Tuesday. Therefore, investors will focus on the upcoming US inflation data scheduled for Wednesday. Economists expect the data to show that the country’s inflation retreated slightly in July this year as gas prices declined.
Another thing to watch will be the ongoing European energy crisis. Russia has slashed gas supplies to Europe to about 20% of capacity and analysts believe that the situation will worsen towards summer.
The situation will likely get worse as the hotter-than-usual summer continues. In a statement on Monday, Norway’s government warned that it could stop selling electricity to European countries soon. The government said that the country’s hydropower plants were having extremely low levels of water. This could hurt European countries like Germany and Denmark.
The four-hour chart shows that the EUR/USD pair has been moving sideways recently. As a result, it is consolidating along the 25-day and 50-day moving averages. It is also between the important support and resistance point at 1.0131 and 1.0276. It is also between the 23.6% and 38.6% Fibonacci Retracement level.
Therefore, the pair will likely remain in this range as traders wait for the upcoming US consumer and producer inflation data. In the near term, however, the pair will likely have a bearish breakout as sellers target parity.
Ready to trade our free daily Forex trading signals? We’ve shortlisted the best Forex trading brokers in the industry for you.