Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.1140.
• Add a stop-loss at 1.0983.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 1.1065 and a take-profit at 1.0960.
• Add a stop-loss at 1.1140.

(Click on image to enlarge)

The EUR/USD exchange rate continued its strong bull run this week and reached a high of 1.1077 as more Fed officials expressed optimism of cuts. It rose to a high of 1.1078, its highest point since December, continuing the strong rally started in April.

FOMC minutes, Jackson Hole, and European inflation data

The EUR/USD pair has been in a strong rally ahead of the upcoming European inflation data set for Tuesday. Economists expect the data to reveal that the headline CPI rose to 2.6% in July from 2.5% in the previous month. Core inflation is expected to have remained unchanged at 2.9%.

If these numbers are correct, they will signal that the bloc’s inflation was rising, which could put a limit on the number of interest rate cuts to expect from the European Central Bank (ECB). In the last meeting, the bank decided to slash them by 0.25% because the economy was cooling.

The EUR/USD pair also rose as Fed officials expressed hopes that the bank will start cutting interest rates soon. In an interview with the Financial Times, Mary Daly of the San Francisco Fed, said that she supported gradual cuts.

Her statement came two days ahead of the Fed’s July meeting minutes in which the bank left rates unchanged and the door open for a September cut. These minutes will provide more information about the recent meeting and what the committee discussed.

The other important catalyst for the EUR/USD pair will be the upcoming Jackson Hole Symposium. This is a crucial meeting where central bank officials meet to talk about the economy. In the past, several important announcements have been made in this meeting.

EUR/USD technical analysis

The EUR/USD exchange rate continued its strong rally this week, reaching a high of 1.1085. It has moved above the key resistance point at 1.0985, the upper side of the inverse head and shoulders pattern.

The pair has moved above the the upper side of the Bollinger Bands indicator. Also, the Percentage Price Oscillator (PPO), a unique form of the MACD indicator, has rallied to its highest level since January.

Therefore, the pair will likely continue rising as buyers target the key resistance level at 1.1140, its highest level in December. Conversely, with the Relative Strength Index at the overbought level, the pair may retreat and retest the support at 1.0985.

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