Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0700.
- Add a stop-loss at 1.0800.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0750 and a take-profit at 1.0800.
- Add a stop-loss at 1.0700.
The EUR/USD exchange rate was flat during the Asian session as traders watched the recent ECB statement on the European economy. It has been stuck at 1.0745 on Thursday, a few points above last Friday’s low of 1.0670.
US housing data ahead
The EUR/USD pair reacted mildly to a statement by the European Central Bank (ECB). In a statement, officials warned that the bloc was facing substantial fiscal burdens from high debt levels, aging population, and defense spending.
The statement came as French bonds continued their sell-off as investors wait for the upcoming election. Recent polls show that Marine Le Pen’s party will win most seats in parliament.
Still, the ECB has ruled out intervening in the bond market, arguing that the situation will stabilize. The statement came two weeks after the bank decided to slash interest rates by 0.25% for the first time in years.
Looking ahead, the EUR/USD will be affected by several important economic data from the United States. Economists expect these numbers to reveal that the housing sector remained steady in May.
The consensus is that the housing starts rose from 1.36 million in April to 1.37 million in May. Also, they expect the building permits rose from 1.44 million to 1.45 million.
The US will also release the Philadelphia Fed manufacturing Fed manufacturing index data. The figure is expected to show that the figure increased from 4.5 to 4.8 in June.
These numbers, while important, will not have an impact on the Federal Reserve. In its decision last week, the bank signaled that it would leave rates higher for longer since inflation remains significantly higher than its 2% target. Analysts expect the bank to deliver one rate cut this year.
EUR/USD Technical Analysis
The EUR/USD exchange rate has bounced back in the past few days. It has risen from last Friday’s low of 1.0670 to a high of 1.0745. As it did that, the pair formed a narrow ascending channel.
The pair has remained below the 50-period moving average and the Ichimoku cloud. At the same time, the MACD and the Relative Strength Index (RSI) indicators have tilted upwards.
There are signs that the rebound is losing steam, meaning that it could have a bearish breakout as sellers target the crucial support at 1.0700.
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