Bullish view
Buy the EUR/USD pair and set a take-profit at 1.2000.
Add a stop-loss at 1.1640.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1640.
Add a stop-loss at 1.2000.
The EUR/USD pair is in a strong uptrend as the US dollar continues its recent downtrend. It rose to the important resistance level at 1.1800, its highest point since February. This rally may continue in the coming days as geopolitical risks ease.
Euro Rally Gains Steam as the Greenback Slips
The EUR/USD pair continued its rally as traders dumped the US dollar as geopolitical tensions faded. Traders are hoping that the war between the US and Iran will end soon. In a statement on Wednesday, President Donald Trump said that he hoped to make a deal with Iran soon.
The end of the war would be bullish for international currencies like the euro as the greenback normally rallies when risks are rising. Also, the falling crude oil prices mean that inflation will moderate in the near term, which will push the Federal Reserve to cut interest rates later this year as the labor market is still fragile.
The EUR to USD exchange rate will react to several key macro data from the US and Europe. Economists expect the upcoming numbers to show that the headline Consumr Price Index (CPI) rose to 2.5% in March as the war boosted oil and gas prices. Core inflation, which excludes the volatile food and energy prices eased from 2.4% to 2.3%.
In a statement this week, Christine Lagarde said that the war had impacted the European economy. However she maintained that the ECB had not made its decision on how it will respond.
The EUR/USD pair will also react to the upcoming US macro data like manufacturing and industrial production data. The other key data to watch will be the initial and continuing jobless claims data, while key Fed officials like John Williams and Stephen Miran will talk.
EUR/USD Technical Analysis
The three-day chart shows that the EUR/USD pair has rebounded in the past few weeks. This rebound happened as the US dollar has continued moving downwards. It has moved above the 50-day moving average and has formed the three white soldiders pattern, a common continuation sign.
Additionally, technical oscillators like the Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have continued rising. Therefore, the pair will likely continue rising as bulls target the key resistance at 1.2000. A drop below the support at 1.1640 will invalidate the bullish outlook.