Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1650.
Add a stop-loss at 1.1500.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1500.
Add a stop-loss at 1.1650.
The EUR/USD exchange rate jumped to its highest level since June 17 after the US released some weak macro data last week. It rose to 1.1570, up sharply from the year-to-date low of 1.1325.
US Dollar Softens After Weak US Data
The EUR/USD pair rose to its highest level in two months after the US released some soft macro data. Reports on Wednesday and Thursday showed that US inflation softened in July this year. The headline and core CPI dropped to 3.5% and 2.4%, respectively.
Still, the annual inflation figures remains above the 2% target level. Also, there is a risk that it will remain above this level for months as the US and Iranian quagmire continues. President Donald Trump is now focusing on economic pressure on Iran now that the US military is running out of weapons.
The EUR/USD pair also rose after the US released a weak retail sales data. Sales dropped sharply in July as consumers cut back on spending. A week earlier, a report showed that nonfarm payrolls (NFP) dropped by 23k in July.
These numbers mean that the Federal Reserve will not be under pressure to hike interest rates as doing that will put the economy under more strain. Odds of the Fed hiking interest rates this year dropped sharply on Polymarket.
The EUR/USD pair will next react to the upcoming US housing starts and building permits numbers on Tuesday. After that, the Fed will publish minutes of the last meeting, providing more information on the last meeting.
The pair will also react to the crucial European inflation report. Economists expect the data to show that the headline CPI rose 2.9% in July, with the core figure rising 2.5%. These numbers have remained above the ECB’s target of 2.0%.
EUR/USD Technical Analysis
The EUR/USD pair has rebounded in the past few days and is now hovering at its highest level in two months. It has jumped above the key resistance at 1.1480, its highest level on July 15 and the neckline of the double-bottom pattern.
The pair has jumped above the 50-day Exponential Moving Average (EMA) and is in the process of forming a bullish flag pattern. This flag pattern often leads to more gains over time.
Therefore, the pair will likely continue rising in the coming days as bulls target the psychological level of 1.1650. This view will be confirmed if it rises above 1.1600.
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