EUR/USD Forex Signal: Double-Bottom Pattern Slowly Forms

The pair will likely drop to 1.0473 and then resume the bullish trend.

Bullish View

• Set a buy-limit at 1.0473 and a take-profit at 1.0600.
• Add a stop-loss at 1.0400.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 1.0450 and a take-profit at 1.0350.
• Add a stop-loss at 1.0600.

The EUR/USD pair was little changed after the mixed economic data from the euro area and the upcoming interest rate decision by the Federal Reserve. It is trading at 1.0520, which is slightly below last Friday’s high of 1.0588.

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Fed Decision Ahead

The EUR/USD pair declined slightly as investors react to the relatively weak consumer and business confidence data.

According to the European Commission, the bloc’s consumer confidence declined from -21.6 in March to -22.0 in April. This decline was worse than the median estimate of -16.9.

Additional data showed that service sentiment declined from 13.6 to 13.5 while industrial sentiment dropped to 9.0 to 7.9. These are important numbers because consumer and industrial confidence have an impact on spending.

Additional data showed that the manufacturing sector did relatively well in April. According to Markit, the German manufacturing PMI was at 55.5 in April, which was better than estimates. In Germany, the PMI dropped slightly to 54.6. Still, many manufacturers complained about the rising cost of doing business.

The EUR/USD pair declined as concerns about energy rose. EU members will conclude a meeting today where they are expected to place an embargo of Russian oil. The process will be phased and complete the process by end of the year. The decision accelerated after Berlin said that it had reduced its oil dependence to 12% and gas to 35%. The pair will react to the upcoming EU GDP and PPI data.

The next key mover for the pair will be the upcoming interest rate decision by the Federal Reserve. Economists expect that the Fed will start hiking interest rates by about 0.50%. The bank will also likely start its quantitative tightening (QT) policy. The rate hike will come at a time when data shows that the economy is weakening.

EUR/USD Forecast

The EUR/USD pair was little changed ahead of the upcoming interest rate decision. It is trading at 1.0515, which was slightly below last Friday’s high of 1.0600. On the four-hour chart, the pair moved slightly below the 25-day and 50-day moving averages while the Stochastic Oscillator has moved to the neutral level.

The pair has moved between the standard pivot point and and the first support. It also seems to be forming what looks like a double-bottom pattern whose upper chin is at 1.0600. The pair will likely drop to 1.0473 and then resume the bullish trend.