The EURUSD currency pair is becoming less volatile in anticipation of upcoming events. Investors are ready to analyze the data that is going to be released next week during and after the meetings of the European and US central banks.
According to the economists polled by Reuters, the European Central Bank will raise interest rates by 25 basis points on July 27. And besides, a slight majority of them expect another rate hike in September.
The eurozone consumer price index almost halved to 5.5% in June from a peak of 10.6% in October last year. However, the ECB's official forecast suggests that the Federal Reserve's 2% inflation target is practically unattainable until 2025. This forces the bank to tighten monetary policy.
Meanwhile, the dollar rose slightly on Thursday after the publication of positive data on initial jobless claims in the US.
This raised traders’ hopes for a halt in rate hikes by the US Federal Reserve.
According to the CME Fedwatch Tool, the Fed will raise rates by 25 basis points at its July 25–26 meeting and keep them in the 5.25–5.5% range until 2024.
The agency’s survey indicates expectations that the next rate hike will be the final one in the regulator’s current cycle of monetary tightening.
Expectations that the European Central Bank would not announce further rate cuts in a meeting on Thursday also boosted the euro against the dollar by about 5%.
The EURUSD price is forming an upward corrective channel on the D1 timeframe.
In terms of wave analysis, the price is forming the fourth descending wave on the H4 timeframe.
The moving indicator Stochastic Oscillator (standard values) has entered the oversold zone. This may reduce the downside potential of the current wave and lead to the development of the fifth upward wave.
The price is expected to move beyond the corrective trend of the daily timeframe and continue an upward trend.
Signal:
The short-term outlook for the EURUSD is to buy.
The target is at the level of 1.1500.
Part of the profit should be fixed near the level of 1.1265.
A Stop-loss should be placed at the level of 1.0935.
The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
