New economic data released on Friday came in stronger than expected, with robust retail sales and rising prices for imported goods. After the data, traders decreased their bets on a December interest rate cut to about a 60% chance from the previous 70%.
The gauge, which reflects the degree to which incoming data exceeds economists’ consensus expectations, was at a seven-month high as of Thursday ahead of the release of stronger-than-expected retail sales figures.
Fed Bank of Chicago President Austan Goolsbee acknowledged that one of the important indicators of inflation, the Personal Consumption Expenditures price index excluding food and energy, remains “too high” at an estimated 2.8% in October. However, he also reiterated his broad expectations that inflation will continue to decline towards the Fed’s 2% target and indicated that, in his opinion, the Fed will eventually cut rates by a quarter percentage point next month and by another full percentage point over the next year, as Fed policymakers forecast in September.
Those projections also reflected the expectations that the interest rate would fall to 2.9% in 2026. Investors in contracts tied to that rate now see rates remaining one percentage point higher than previously forecast.
From the technical point of view, EURUSD corrected to the level of 1.0600 on the daily timeframe last Friday. Now it is time to consolidate this correctional movement on a higher timeframe, the weekly one. Therefore, another upward movement of EURUSD towards this target level is expected.
The overall recommendation is to buy EURUSD.
Profits should be taken at the level of 1.0600. A Stop loss could be set at the level of 1.0430.
The volume of the opened position should be set in such a way that the value of the possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
