Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0900.
- Add a stop-loss at 1.070.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0700.
- Add a stop-loss at 1.0900.
The EUR/USD exchange rate continued its downward trend this week and is hovering near its lowest level since March 5. It has dropped in the past four straight day, moving downwards by 1.55% from its highest level this year.
Risk-on sentiment continues
The EUR/USD exchange rate has retreated in the past few days even as the market embraced a risk-on sentiment on Monday.
US equities surged, with the Dow Jones rose by 450 points, while the S&P 500 and the Nasdaq 100 indices rose by over 2%.
The market reacted to the latest reporting on the upcoming reciprocal tariffs. Donald Trump is expected to have excluded some key items from tariffs when they kick in next week.
The EUR/USD exchange rate also declined as the market reflected on the flash manufacturing and services PMI numbers from the United States and Europe.
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According to S&P Global, the Eurozone PMI rose from 47.6 in February to 48.7 in March, higher than the median estimate of 48.3. While the figure remained below the expansion zone of 50, there are signs that it is moving in the right direction.
The composite PMI rose from 50.2 in February to 50.4 in March, missing the estimated 50.8. Another figure from the US showed that the manufacturing PMI dropped from 52.7 in February to 49.8, missing the estimated 51.8. The services PMI rose from 51 to 54.3.
These numbers means that the US economy is doing relatively well even as tariff issues remain. The next key data to watch will be the upcoming US consumer confidence data by the Conference Board. Economists expect the data to show that the confidence dropped from 98.3 in February to 94.2 in March as concerns about tariffs and Elon Musk’s layoffs continued. The US will also release the latest US house price index, while Fed member John Williams will have a speech.
EUR/USD technical analysis
The daily chart shows that the EUR/USD exchange rate peaked at 1.0953 this month and then has retreated to a low of 1.0782 since March 5 this year. Its upper side this month was the highest point on November 6 last year. It has dropped below the key support level at 1.0823 the neckline of double-top level at 1.0935.
The pair has formed a cup and handle chart pattern, a popular bullish signal in the market. The ongoing retreat is part of the handle section of this pattern. It also remains above the 50-day moving average.
Therefore, the EUR/USD pair will likely resume the uptrend and possibly retest the upper side of the cup at 1.0930.
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