Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.100.
- Add a stop-loss at 1.0600.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0600.
- Add a stop-loss at 1.1000.
The EUR/USD exchange rate surged to its highest level since November 8 ahead of the upcoming European Central Bank (ECB) decision. It also jumped as German bond yields surged to the highest point since October 2023. It rose to a high of 1.0790, much higher than the lowest point this month of 1.0185.
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ECB interest rate decision ahead
The EUR/USD pair surged after Germany announced that it would unlock billion of dollars to fund its defense. Its ten-year yield to rose to the highest point since 1990 as the chancellor-in-waiting laid out a plan to boost defense spending.
The pair also surged as the market waited for the upcoming European Central Bank decision. Economists expect the bank will cut interest rates again by 0.25% as it seeks to supercharge the economy. It is unclear whether the bank will continue cutting interest rates later this year.
The EUR/USD exchange rate rose after ADP published a weak jobs report from the US. According to the ADP, the economy added just 77k jobs in February, lower than the meduan estimate of 141k and the previous 186k.
This decline was likely because many companies embraced a wait-and-see attitude on whether Trump would go on with his tariff threat. The ADP report came two days ahead of the upcoming nonfarm payroll (NFP) data. Economists expect the US will release a weak jobs report as the economic slowdown continued.
The EUR/USD pair rose after Donald Trump appeared to go slow on the recently announced tariffs on top US allies. He has come under pressure from business leaders and elected officials on their impact.
EUR/USD technical analysis
The EUR/USD pair has been in a slow uptrend after bottoming at 1.0160 in January. It rebounded to a high of 1.0800, its highest level since November 11 and the 61.8% Fibonacci Retracement level.
The pair has moved above the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bulls have prevailed. The closely-watched bull bear power (BBP) indicator jumped to the highest point in over a year.
Further, the Relative Strength Index (RSI) and the MACD indicators have continued rising, a sign that the pair is gaining momentum. Therefore, the pair will likely keep rising as bulls target the next psychological point at 1.100. However, this being an ECB decision day, there is a likelihood that it will have more volatility.
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