EURUSD is correcting ahead of important U.S. and European economic data

The EURUSD currency pair declined during the previous trading session as the dollar gained support after the release of U.S. economic data. At the same time, the euro had difficulty making progress due to the deteriorating outlook for economic growth in the eurozone. Tuesday's data showed that U.S. business activity rose in October as the manufacturing sector recovered from a five-month decline. In contrast, business activity in Europe unexpectedly weakened this month.

According to CMC Markets analyst Tina Teng, the eurozone economy is somewhat entering a recession. This reinforces expectations that the European Central Bank (ECB) may have reached a peak in interest rate hikes. In contrast, the U.S. Federal Reserve (Fed) may continue to tighten monetary policy just because of the strong economic data, Teng added.

On Thursday, the ECB will announce its decision on interest rates. They are expected to remain at the 4.5% level. Previously, the European regulator has consistently raised the deposit rate at each of its 10 meetings, hitting a record high. However, policymakers now argue that a pause is needed to assess the impact of monetary tightening.

If the ECB decides to keep the rate unchanged, as expected, this could lead to some stability in EURUSD as the market has already largely considered such an outcome.

Investors are also awaiting the publication of the U.S. GDP data for the third quarter on Thursday and the price index on Friday. Currently, analysts suggest an increase in inflation from 0.1% to 0.3% month-on-month. The release of these statistics is of particular importance ahead of the Fed's interest rate decision next week.

The EURUSD quotes moved beyond the D1 timeframe downtrend.

The price is forming a corrective ascending channel on the H4 timeframe. The news background of the current week may bring the currency pair's quotes closer to the ascending support. Such a scenario may create conditions for more profitable technical purchases.

Signal:

The short-term outlook for the EURUSD pair suggests buying around the level of 1.0555.

The target is at the level of 1.0730.

Part of the profit should be taken near 1.0670.

The Stop-loss is set at 1.0480.

Bullish trend has a short-term character, so the trade volume should not be more than 2% of your balance.