EUR/USD trading idea
Despite the local revival of buyers, EUR/USD remains in a downtrend and at the moment trades near the strong level of 1.0600.
The dollar is strengthening its position in the currency market. It is supported by expectations of another Fed rate hike, as well as macroeconomic statistics. The dollar index is approaching the level of 106.00 - the maximum of November last year.
The yield on 10-year U.S. debt bonds reached 4.55%, the highest level since 2007.
On Thursday, Jerome Powell will speak and the revised estimate of the US second quarter GDP will be released. In addition, investors' attention is focused on the problems of the public debt of the United States. American lawmakers can not reach a consensus on the issue of reducing expenditures, and if by October 1 consensus is not found, the suspension of government activity is possible. In such a scenario, the demand for the dollar as a protective asset will grow.
The day before, Christine Lagarde spoke at the Committee on Economic and Monetary Affairs of the European Parliament. The head of the ECB expressed concern about the high level of inflation, but noted the stability of the labor market. Christine Lagarde considers the rate of the European Central Bank sufficient for inflation to fall to the target of 2%. Investors realize that the ECB has ended the cycle of tightening financial conditions, which is a bad signal for the euro.
Taking into account the fundamental background, macroeconomic statistics, technical analysis and readings of the main Forex indicators, we believe that the pair's decline will continue and we suggest placing a sell order for EUR/USD
- Sell-stop 1.0570
- take-profit 1.0400
- top-loss 1.0630