Bullish View
- Set a buy-stop at 1.0615 and a take-profit at 1.0700.
- Add a stop-loss at 1.0550.
- Timeline: 1-2 days.
Bearish View
- Sell the EUR/USD and set a take-profit at 1.0500.
- Add a stop-loss at 1.0650.
The EUR/USD pair rose to an important resistance level after a hawkish statement by Christine Lagarde. The pair rose to a high of 1.0615, which was the highest level since June 10th of this year. It has risen by more than 2.2% above the lowest level this month.
Christine Lagarde Points to Rate Hike
The EUR/USD pair rose as Christine Lagarde of the European Central Bank made a statement during the American session.
In it, she reiterated that the bank was focused on fighting inflation. It has already reduced its bond market activity and is now set to deliver its first interest rate hike in years in July. She signaled that the rate hike will be 0.25%. Most importantly, she will pull the ECB out of negative interest rates in September. Lagarde will deliver more remarks on Tuesday.
The EUR/USD also reacted to the latest strong numbers from the United States. Data by the Commerce Department showed that durable goods orders rose from 0.4% to 0.7%, which was higher than the expected 0.1%. Core durable orders rose from 0.2% to 0.7% in May as demand continued rising.
Meanwhile, after two weeks of weak housing data, the US published surprising pending home sales data. According to the National Association of Realtors, pending home sales rose by 0.7% in May compared with April. This was a surprise since pending home sales dropped in the previous six straight months.
Pending home sales rose even as the 30-year fixed mortgage rate rose to 5.64%. At the same time, the supply of homes has started rising, according to Realtor.com.
The next key data to watch will be the upcoming US consumer confidence number by the Conference Board. Analysts expect the data to show that consumer confidence dropped to 100 in June as inflation surged.
EUR/USD Forecast
The EUR/USD pair has formed an ascending triangle pattern on the four-hour chart. It moved to the upper side of this triangle and it remains slightly above the 25-day and 50-day moving averages. The Stochastic Oscillator has moved slightly below the overbought level.
The pair formed an evening star pattern, which is usually a bearish sign. Therefore, there is a possibility that the pair will drop to the key support at 1.0540 as the triangle pattern nears its confluence. In the coming days, it will likely have a bullish breakout as bulls target the key resistance at 1.0700.
