EURUSD on the verge of global upward reversal

The Federal Reserve has made significant inroads in its battle to bring inflation down, and if that progress continues, attention will turn to how long to keep interest rates at their current level, Chicago Fed President Austan Goolsbee said on Tuesday.

"Over the next few months, we might achieve the fastest drop in inflation in the last century," Goolsbee told CNBC.

"So, we're making progress in bringing inflation down, and while we're on that path, as I've been saying for a long time, the argument about how high the rate should go will fade away."

The U.S. central bank kept its benchmark interest rate unchanged in the 5.25% and 5.50% range last week, but left a possibility of further increases in borrowing costs to get inflation back to its 2% target amid a resilient economy.

Goolsbee is not the only one who is talking about the prospect of fading inflationary pressures, and the associated prospect of a potential market reversal.

At the last press conference, Fed Chairman Powell hinted that the Fed has probably gone too far with rate hikes to support the markets.

The planned reversal will be done slowly and cautiously, without exposing the markets to the risks of high volatility. In his statements, Powell will shift in small steps from tightening to keeping the rate at the current level and then to a possible easing. It is important that this is not a shock to the markets and that the phase of accepting the new realities takes place with the ground prepared for it.

The duration of this reversal will take about a year.

Technically, EURUSD has a formed target at the level of 1.15. This level started to form back in late 2014, the price tested it several times from below and above.

So now, it looks quite reasonable to assume that if such a reversal starts to take place, it will tend to EURUSD to the target of 1.15.

Overall recommendation is to buy EURUSD in the long term.

Take profit at 1.15. A stop loss could be set at 1.00.