Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1025.
- Add a stop-loss at 1.0900.
- Timeline: 1-1 days.
Bearish view
- Set a sell-stop at 1.0945 and a take-profit at 1.0900.
- Add a stop-loss at 1.1025.
The EUR/USD exchange rate continued rising this week as the US dollar index pulled back after last week’s Federal Reserve decision and the weak nonfarm payrolls (NFP) data. It rose to the important psychological point at 1.100, its highest point since January 2nd.
US Jumbo rate cut
The EUR/USD continued rising as concerns about the US economy continued after a series of weak economic data. Last week, data by the Bureau of Labor Statistics (BLS) revealed that the economy created over 114k jobs in July while the unemployment rate rose to 4.3%.
A separate report showed that the initial jobless claims numbers rose to the highest point since 2023. On Monday, a report by S&P Global showed that the composite PMI fell to 54.3 while the services figure moved from 55.3 to 55.0.
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On the positive side, the country’s ISM non-manufacturing PMI rose from 48.8 in June to 51.4 in July while the non-manufacturing price jumped to 57.
Still, analysts believe that the Federal Reserve will need to delver several rate cuts for the US to avoid a recession. In a note, analysts at UBS predicted that the US would avoid a recession but that the Fed would deliver 100 basis rate cuts.
ING economists believe that the Fed will cut three times while Wharton University’s Jeremy Siegel recommended the bank to deliver a super-jumbo rate cut of 75 basis points in the next monetary policy meeting.
There will be no major economic data that will move the EUR/USD pair on Tuesday. The only data to watch will be the upcoming European retail sales and US trade data. While these numbers are important, they will likely have a limited impact on the pair.
EUR/USD technical analysis
The EUR/USD exchange rate bounced back this week as investors predicted a bigger rate cut by the Fed. On the daily chart, it was trading at 1.0945, the neckline of the inverse head and shoulders chart pattern. In most cases, this pattern is one of the most bullish signs in the market.
The pair is being supported by the 50-day and 25-day Exponential Moving Averages (EMA) while the Percentage Price Oscillator has moved above the neutral point. Therefore, the pair will likely continue rising as buyers target the key resistance point at 1.1025.
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