EURUSD may continue to fall on European inflation figures

EURUSD's downward movement slowed after two Federal Reserve (Fed) officials hinted at the possibility of three interest rate cuts in 2024.

The president of the Federal Reserve Bank of San Francisco, Mary Daly, and her colleague from Cleveland, Loretta Mester, announced three possible rate cuts during 2024. At the same time, officials do not consider these steps to be urgent.

Fed Chairman Jerome Powell is scheduled to speak on Wednesday. This will provide new insight into his views on economic policy. Also at the end of the week, traders will be analyzing non-farm payrolls data. According to a Bloomberg survey, a significant increase in employment is expected.

Meanwhile, the European Central Bank (ECB) is preparing to cut interest rates in June due to slowing inflation in the region. Consumer prices in Germany rose 2.2% last month from a year earlier, according to the country's statistics office. The main factor behind the slowdown in price growth was the dynamics of food costs.

Data on slowing inflation also came out in France last week. At the same time, price growth accelerated in Italy and Spain. This is in line with policymakers' warnings that the road to achieving the 2% inflation target will not be easy.

The overall EU inflation figure will be released today. A confirmation of the 2.5% forecast will allow the ECB to prepare investors for the first cut in borrowing costs in June.

EURUSD rate is in a broad correction of the H4 time frame.

In terms of wave analysis, the price is currently forming the fourth bullish wave on the H1 timeframe. The Relative Strength Index (RSI) indicator (standard values) indicates a change in the direction of the price movement and the transition to the fifth downward wave, which is reflected in the divergence.

Signal:

Short-term prospects for EURUSD suggest selling. 

The target is at the level of 1.0690.

Part of the profit should be taken near the level of 1.0725.

A stop-loss could be placed at the level of 1.0830.

The bearish trend is short-term, so trade volume should not exceed 2% of your balance.