Fundamental analysis of EUR/USD

A brief review of economic developments:

Yesterday, the U.S. regulator paused and held rates at 5.25 percent. The move signals that members of the Open Market Committee see positive trends in the U.S. economy. The U.S. Federal Reserve announced that it will assess the impact of previous rate hikes before its next meeting. As a reminder, the central bank began raising rates in March 2022 and is seeking to gather more information about the effects on monetary policy. According to market estimates, the probability of a rate hike at the July meeting is nearly 60%. Overall, despite the pause, the U.S. currency looks attractive to investors.

At the same time, the ECB will announce its interest rate decision today. An increase of 25 basis points is expected. Just like in USA, Eurozone is struggling with inflation, but EU economy is in a tougher situation, so ECB press-conference will be important. At the same time the weak European trade balance data has not had a major negative impact on the European currency, indicating a high probability for the pair to strengthen if the regulator hikes the rate today.

Macroeconomic data impact:

A lot of important macroeconomic releases from both sides are expected on Thursday, just like yesterday. In addition to the ECB's monetary policy decision, investors are expecting data on retail sales, import prices and U.S. industrial production.
Today Investizo again warns market participants about the strong volatility at the time of the release of the statistics and urges its clients to be cautious.

Technical Analysis and Scenarios:

Key levels:

Support levels: 1.06290, 1.06710, 1.07440, 1.08045
Resistance levels: 1.08630, 1.09190, 1.10000, 1.010794

Bollinger Bands: The EUR/USD is at the upper end of the Bollinger Band, which indicates a possible strengthening of the Euro. However, the widening of the band may indicate a possible increase in volatility.

MACD: MACD is above the signal line, which indicates an uptrend. This could indicate a strengthening of the Euro against the USD.

Stochastic Oscillator: Stochastic Oscillator value is below the signal line, which might indicate a possible decline. Strengthening of dollar against Euro is likely.

Main scenario: EUR/USD may continue to strengthen to the resistance level of 1.08630. If this level is broken through, the next target level will be 1.09190. Recommended levels for take profit: 1.08630 and 1.09190. Stop loss: 1.08045.
Alternative scenario: short positions should be opened below the level of 1.08040 with a target of 1.07260 and stop loss at 1.08470.