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EUR/USD Forex Signal: Relief Rally Has More Room to Run – 07 November 2022


The price has moved back to the pivot point and is slightly above the Ichimoku cloud.


Buy the EUR/USD pair and set a take-profit at 1.0100.Add a stop-loss at 0.9850.Timeline: 1-2 days.

Bearish view

Set a sell-stop at 0.9890 and a take-profit at 0.9800.Add a stop-loss at 1.000.

The EUR/USD pulled back to the highest level since November 2 after the relatively robust American jobs data. It rose to a high of 0.9957, which was higher than last week’s low of 0.9735. Focus now shifts to the upcoming American consumer and producer inflation data.

Fed decision and NFP data

The EUR/USD price made a strong recovery last Friday as the market reflected on the latest Fed decision and US inflation data. On Wednesday, the Federal Reserve delivered its fourth straight jumbo rate hike of 0.75%. This increase was in line with what analysts were expecting.

In its statement, the bank hinted that it will slow the pace of rate hikes going forward. Now, analysts expect that the bank will hike by 0.50% in December followed by several other rate hikes until March next year.

The rate decision was followed by the relatively strong American non-farm payrolls (NFP) data. According to the Bureau of Labor Statistics (BLS), the American economy added more than 261k jobs in October while the unemployment rate rose to 3.7%. Wage gains also continued rising.

Still, there are signs that the labor market is cooling. In the past three months, the economy added an average of 289k jobs compared to the 539k that it added in the same period last year.

The next key catalyst for the EUR/USD pair will be the upcoming American inflation data scheduled for Thursday. Economists polled by Reuters expect that the headline consumer price index (CPI) declined from 8.2% to 8.0%. On a MoM basis, they expect that inflation rose from 0.4% to 0.7%.

Core inflation, which excludes the volatile food and energy prices, is expected to rise have dropped from 6.6% to 6.5%. Higher-than-expected inflation could push the Fed to continue hiking interest rates for longer.

EUR/USD forecast

The four-hour chart shows that the EUR/USD pair made a strong recovery on Friday and held steady on Monday morning. It has managed to move above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved close to the overbought level.

The price has moved back to the pivot point and is slightly above the Ichimoku cloud. Therefore, the outlook for the pair is bullish, with the next key level to watch will be 1.0100, which is the first resistance level of the standard pivot point.

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