Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1325.
Add a stop-loss at 1.1480.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1480.
Add a stop-loss at 1.1480.
The EUR/USD pair wavered at a crucial support level as traders waited for the upcoming European Central Bank (ECB) interest rate decision. It dropped to 1.1410, a few pips below this month’s high of 1.1482.
ECB to Deliver a Hawkish Pause
The EUR/USD pair wavered as traders waited for the upcoming ECB decision. Economists expect the bank to leave interest rates now that inflation stabilized in June.
However, there is a likelihood that Christine Lagarde and her team will leave the door open for a rate hike later this year since inflation concerns have resumed.
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Brent has jumped by 21% in the last 30 days as the crisis in the Middle East has resumed. European gas prices have also soared by 48% in this period, and this surge may continue in the foreseeable future.
Iran and the United States have continued their battle this week, with each side maintaining a tough stance. Trump has threatened to continue his attacks and has sent dozens of fighter jets to the region. In a statement on Wednesday, Secretary of State Marco Rubio maintained that Iran was not ready for talks.
The most recent data showed that European inflation dropped to 2.8% in June from 3.2% in May, marking the lowest level since February this year. It has remained above the bank’s 2% target since February, when it was at 1.9%. Inflation will likely bounce back if the US-Iran continue.
The only macro data from the United States will be the US initial jobless claims report. The last report showed that the number of claims rose by 208k in the previous week. Economists expect the data to show that the jobless claims rose 211k last week.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has done well in the past few weeks. It has formed an ascending channel and is now in its lower side. This channel is part of the formation of the bearish flag pattern.
The pair is also trading at a crucial support level that was its lowest point in March this year. It has also remained below the 50-day moving average, while the Relative Strength Index (RSI) has continued falling.
Therefore, the pair will likely continue falling, potentially to the key support level of 1.1326. A drop below that level will point to more downside to the psychological level of 1.1300.
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