Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1827.
- Add a stop-loss at 1.1600.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1600.
- Add a stop-loss at 1.1827.
The EUR/USD exchange rate held steady on Monday morning a traders assessed the next actions by the European Central Bank (ECB) and the Federal Reserve. It was trading at 1.1705, up sharply from the year-to-date low of 1.0190.
Fed and ECB Next Moves
The EUR/USD pair rose last week as th United States published important macro data. The first report showed that the headline consumer price index (CPI) remained at 2.7% in July, while the core inflation, which excludes the volatile food and energy prices, rose to 3.1%.
Another report showed that the core producer price index (PPI) rose to a whopping 3.6%, a sign that companies are being hurt by Donald Trump’s tariffs, a trend that will continue now that levies have increased. The European Union’s levies have jumped to 15%, while Swiss and Brazil’s rose to 39% and 50%, respectively.
Another report showed that the US retail sales rose in July. The value of retal sales not adjusted for inflation rose 0.5% in July, from an upwardly revised 0.9% in the previous month. The sales growth was broad-based, with 9 out of 13 categories recording growth.
These numbers showed that consumer spending remained resilient even as Donald Trump implemented his tariffs and the labor market deteriorated. A likely reason for the gains was the Amazon Prime Day and Walmart’s Deal event. Other retailers also had similar shopping events.
These numbers pushed investors to pare back their Federal Reserve interest rate cuts expectations. While most of them see a rate cut in September, others expect it to delay a bit.
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The other key catalyst for the EUR/USD pair will be Tuesday’s building permits and housing starts data and a speech by Michele Bowman. Eurostat will publish the latest European inflation data on Wednesday.
EUR/USD Technical Analysis
The eght-hour chart shows that the EUR/USD exchange rate rose from a low of 1.1391 earlier this month to 1.1700 today. It has moved above the 50-period moving average, which is a positive side.
The pair also formed an inverse head-and-shoulders pattern, whose head is at 1.1391. The neckline, which is shown in black, is slightly below the highest swings since July.
Therefore, the pair will likely continue rising as bulls target the key resistance at 1.1827, which is much higher than where it is today, and the highest point this year.
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