Bullish View
- Set a buy stop at 1.0276 and a take-profit at 1.0400.
- Add a stop-loss at 1.0150.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 1.0200 and a take-profit at 1.0130.
- Add a stop-loss at 1.0280
The EUR/USD remained in a tight range on Tuesday morning as investors waited for the upcoming US consumer confidence data and FOMC decision. The pair also reacted to the relatively weak German confidence data and Russia’s decision to slash gas deliveries via Nord Stream 1 pipeline. It is trading at 1.0226, which is slightly below last week’s high of 1.0276.
Russia Reduces Europe Gas Supplies
The EUR/USD pair remained under intense pressure as investors remained concerned about Europe’s energy crisis. In a statement on Monday, Gazprom said that it will cut daily gas deliveries via the important Nord Stream 1 pipeline by 20%.
This means that the company will only deliver about 33 million cubic meters starting on Wednesday this week. Nord Stream 1 pipeline starts at Saint Petersburg and ends in Germany. The company has already slashed gas deliveries to Europe in the past few months.
Therefore, there are concerns about how the European economy will perform since the bloc does not have any immediate sources that can completely compensate for Russian gas. As such, countries like Germany will likely move to gas rationing in the next few months.
Data published on Monday showed that German companies are worried about energy. According to the IFO Institute, Germany’s current assessment declined from 99.4 to 97.7 while business expectations dropped from 85.5 to 80.3. These numbers came less than a week after the European Central Bank (ECB) decided to hike interest rates for the first time in more than 10 years.
The next important mover for the EUR/USD pair will be the upcoming US consumer confidence data and house price index numbers. Analysts expect the data to show that home prices remained at elevated levels while consumer confidence declined to 97.7. These numbers will come as the Fed starts its monthly meeting. It is expected to deliver another large interest rate hike on Wednesday.
EUR/USD Forecast
The EUR/USD pair moved sideways as the recent recovery fades. It is trading at 1.0225, which is slightly below last week’s high of 1.0276.
The pair has moved above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has formed a bearish divergence pattern.
Most importantly, it has formed what looks like a head and shoulders pattern. Therefore, the pair will likely have a bullish break-out ahead of the FOMC decision. If this happens, the next key level to watch will be at 1.0400.
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