Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1800.
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 1.1800.
The EUR/USD pair continued its strong rally, reaching its highest level since May as the US dollar softened across the board. It jumped to a high of 1.1676, up sharply from the year-to-date low of 1.1324.
ECB Minutes to Shed Color on Future of Interest Rates
The EUR/USD pair rose after a series of major macro events from Europe and the United States. A report by Eurostat showed that the bloc’s consumer inflation jumped from 2.8% in June to 2.9% in July as energy prices rose. Core inflation, which excludes the volatile food and energy prices, rose from 2.4% to 2.5%.
These numbers have moved further away from the European Central Bank (ECB) target of 2.0%. As a result, there is a high probability that the bank will hike interest rates in the coming meetings. The upcoming minutes of the last meeting will provide more information about the last meeting and what to expect.
Top Regulated Brokers
The pair has also continued rising after the Federal Reserve delivered minutes of the last meeting. These minutes showed that several officials supported high interest rates because of the elevated inflation rate. Inflation may remain above the 2% target in the coming months as the US-Iran stalemate continues.
The EUR/USD pair also jumped after the US Treasury Department intervened in the bond market. It did that by increasing the bond buybacks after the 30-year yield jumped to the highest level in 20 years. After the intervention, it dropped to the lowest level in two weeks. European long-term bond yields also retreated from the recent highs.
EUR/USD Technical Analysis
The EUR/USD pair has remained in a tight range in the past few days. It remained inside the support and resistance levels of 1.1513 and 1.1575 in this period. By doing this, it formed a bullish flag pattern, a popular continuation sign in technical analysis.
The pair has moved above the crucial resistance level of 1.1624, its highest level on June 5 this year. Also, the two lines of the MACD indicator have crossed the zero line and is continuing rising.
Therefore, the pair will likely continue rising in the coming days. If this happens, the pair will likely continue rising as bulls target the next key resistance level of 1.1800. A drop below the support level of 1.1600 will invalidate the bullish outlook.
Ready to trade our free trading signals? We’ve made a list of the best European brokers to trade with worth using.