EUR/USD: Fundamental Analysis + Possible Next Target ABCD

11 mai 2023

On Thursday, the EUR/USD pair continued its downward trend, hitting a fresh weekly low of 1.0917 during London trading hours. Despite poor performance from government bond yields, the US Dollar gained ground due to a persistent gloomy sentiment. Prior to Wall Street's opening, the 10-year note yields fell 6 basis points to 3.36%, while the 2-year note dropped 6 bps to 3.83%.

The Euro declined following comments from European Central Bank (ECB) official Joachim Nagel, who emphasized that the ECB will make decisions on a meeting-by-meeting basis, dismissing rumors of a September rate hike. In addition, the ECB's Consumer Expectations Survey revealed that consumer inflation expectations increased significantly in March, while expectations for economic growth over the next 12 months became slightly more negative.

On the data front, Initial Jobless Claims in the United States (US) unexpectedly surged to 264K for the week ending May 5, much worse than the anticipated 245K. On a positive note, the Producer Price Index (PPI) rose 2.3% YoY in April, below the previous 2.7% and less than the 2.4% forecast. Compared to the previous month, the PPI saw a modest increase of 0.2%, surpassing market expectations.

From a technical perspective, the completed AB=CD Pattern indicates that the D leg has reached the point 1.621 Extension, where the price may experience a reversal in this area, as seen in the previous AB=CD Pattern. Our target area for the next bullish move is around the upper side of the bearish channel at 1.09800, with a stop loss at 1.0855. That's our bullish idea.