Selling EURUSD after correction to level 1.1000

The European Central Bank is expected to make more aggressive interest rate cuts in the coming months to support the economy, aiming to set borrowing costs at a level that no longer constrains demand by the end of 2025.

The change in expectations reflects a similar recalibration of financial markets, prompted by data pointing to a faltering economy and faster disinflation in 20 eurozone countries.

In September, price growth in the euro area dipped below 1.8% for the first time since 2021, but the ECB warns that it may creep back up again in the coming months, especially given persistent pressures in the services sector.

With inflation now below the 2% target, it is likely that the ECB will cut its deposit rate by a 0.25% next week. Two more cuts are forecast to occur in June and December 2025, bringing the interest rate down to 2%.

Meanwhile in the US, the September consumer price indices were released yesterday, showing a slight increase in inflationary pressures in the US economy.

The Consumer Price Index (year-over-year) came in at 2.4%, with a forecast of 2.3%, while the core Consumer Price Index (also year-over-year) came in at 3.3%, against a forecast of 3.2% and a previous reading of 3.2%.

This supports the arguments in favor of a highly cautious stance on further policy easing by the Fed. Thus, it creates conditions for a medium-term weakening of the EURUSD currency pair.

It is also necessary to keep in mind that now the EURUSD price is in the oversold zone and the pair is set to correct upwards to the previously broken level of 1.1000, from which it is more reasonable to sell with the target of 1.0850.

The final recommendation is to sell EURUSD with a limit order from the level of 1.1000.

The profit is fixed at the level of 1.0850. The loss is fixed at the level of 1.1100.

The volume of the opened position should be set in such a way that the value of the possible loss, fixed with the help of a protective stop order, is no more than 2% of the deposit funds.