There is a likelihood that the pair will likely hold steady ahead of the ECB and then have a pullback on profit-taking.
Bullish View
- Buy the EUR/USD pair and set a take-profit at 1.1350.
- Add a stop-loss at 1.1250.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 1.1290 and a take-profit at 1.1240.
- Add a stop-loss at 1.1350.
The EUR/USD pair continued its bullish trend as investors waited for the upcoming interest rate decision by the European Central Bank (ECB). the pair is trading at about 1.1300, which is significantly higher than last week’s low of 1.1120.
ECB Decision
The EUR/USD price has been in a bullish trend in the past few days as investors reflect on strong economic data from the European Union and the upcoming interest rate decision by the ECB.
On Monday, Eurostat published strong GDP numbers from the region. The data showed that the bloc’s economy expanded sharply in the fourth quarter. This recovery was a comeback considering that it retreated in the previous quarter.
Further data from the EU showed that the labor market has made recovery even as the Omicron variant continues to pose substantial challenges. The unemployment rate from the region declined to an all-time low of 7% even as travel remains constrained.
On Tuesday, data by Markit showed that the manufacturing PMI held steady above 50 in January as supply chain issues started to ease.
Finally, and most importantly, on Wednesday, data by Eurostat revealed that the bloc’s inflation jumped to 5.1% in January.
It is against this backdrop that the ECB will conclude its meeting later today. With the economy rebounding, there is a likelihood that Christine Lagarde will deliver a hawkish statement even as she leaves the current policy framework intact.
Some analysts expect that the ECB chair will signal that it will end the quantitative easing policy later this year.
The EUR/USD also held steady after the latest jobs numbers by ADP. The data revealed that the private sector in the US lost more than 300k jobs in January even as the number of job openings remained at elevated levels.
EUR/USD Forecast
The four-hour chart shows that the EUR/USD pair continued with its bullish trend ahead of the ECB decision and the upcoming US non-farm payrolls (NFP) data. It is attempting to move above the Ichimoku cloud.
Additionally, the pair has moved above the 25-day and 50-day moving averages. The two lines are even attempting to make a crossover. It is slightly below the 50% Fibonacci retracement level.
Therefore, there is a likelihood that the pair will likely hold steady ahead of the ECB and then have a pullback on profit-taking. The key support and resistance levels are at 1.1250 and 1.1350.
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