Trade of The Day – EUR/USD

Facts:

• Euro area inflation expectations according to the ECB are lower than expected inflation according to the University of Michigan over the analogous period (3.5 vs. 4.2).
• US CPI inflation came in at 3.4% versus 3.3% CPI inflation in the euro area.
• US GDP growth was 1.5% versus 0.4% in the euro area (QoQ).
• As of 09.02.2026, futures contracts price in 1.59 rate hikes in the US by the end of 2026, versus 1.92 rate hikes in the euro area.
• RSI [14] remains around 51 points.

Recommendation:

• Short position (Sell) on EURUSD at the market price.
• Target price (Take Profit, TP): 1.101
• Stop Loss (SL): 1.204

EURUSD (D1)

Source: xStation5

OPINION : On the EURUSD pair, a clear repricing of both the probability and the scale of interest rate hikes can currently be observed, which should trigger a correction in the euro versus the US dollar. Price growth in Europe is weaker than in the US, inflation expectations are lower over analogous periods than in the US, and economic growth is clearly lower than in the US. This not only implies asymmetric risk between an economic slowdown and further price increases for Europe (to the detriment of the economy), but also clearly shows a trend in which the macro environment in the US is much more supportive of rate hikes in the US than in Europe. Despite this, futures contracts suggest as many as 1.92 rate hikes in Europe by the end of 2026 and as many as 3.1 by July next year. Over the analogous period, rates in the US are expected to rise by 1.59 and 2.53, respectively. In terms of the absolute change in the policy rate, this implies a difference of +0.792 for the euro and +0.644 for the USD. It is worth remembering that the current ECB deposit rate is 2.25% versus the Fed rate of 3.625% (average). Even if the entire hiking cycle fully materializes, the Fed’s rate remains clearly higher. From a technical analysis perspective, this move is confirmed by the “death cross” formation, i.e., the EMA100 crossing below the EMA200.

Methodology and assumptions

• The recommendation is based on technical analysis of the chart, in particular EMA moving averages and Fibonacci levels, as well as fundamental analysis of the FX market.
• The target level was determined based on a linear regression from 2019 to 2026 and a Fibonacci level.
• The protective stop loss order was determined based on a favorable risk-to-reward ratio and based on a Fibonacci level.

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