Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1715.
- Add a stop-loss at 1.1550.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1550.
- Add a stop-loss at 1.1715.
EUR/USD was flat on Thursday, but the next two days will be important as the US releases important data and the European Central Bank (ECB) delivers its interest rate decision. It was trading at 1.1630, a few points above this month’s low.
ECB Decision and US Inflation Data
The EUR/USD pair wavered as traders waited for the upcoming European Central Bank (ECB) decision. Economists expect the bank, which Christine Lagarde leads, will decide to hike interest rates by 25 basis points to 2.65%. The bank will hike the rate as it reacts to the elevated inflation, which has remained above the 2% target in the past few weeks.
As such, since the rate hike has been priced in, focus will be on the press conference in which Lagarde will provide hints on what to expect later this year. Her statement comes a few days after the recent German election in which the right-wing AfD won.
Most importantly, the statement comes as European bond yields soar. In Germany, the ten-year jumped to 3.454%, while in France, it soared to 4.343%. The same is happening in other countries, including in Spain and Italy.
The EUR/USD pair is also reacting to the upcoming US producer price index (PPI) and consumer price index (CPI). These numbers will provide more information about the state of the US economy. A higher inflation figure will raise the odds of the Fed hiking interest rates next week.
The inflation report will come as the Treasury Department battles to lower bond yields. Scott Bessent announced that he will buy back long-term bonds worth $6 billion today. It will target 10-and 20-year Treasury notes, a less liquid part of the market.
Despite the intervention, US bond yields continued soaring, with the ten-year hitting its highest level in years.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has been in an uptrend after bottoming at 1.3140. It peaked at 1.1325 in August and then pulled back to the current 1.1630.
The pair has held steady above the 50-day moving average, which has provided it with substantial support. Also, the Relative Strength Index (RSI) has moved from 26 in June to the current 57.
Therefore, the pair will likely continue rising as bulls target the key resistance at 1.1711, its highest point in August. A move above that level will point to more gains towards 1.1800.
Crispus Nyaga is a Technical Analyst at DailyForex with more than eight years of experience as a financial analyst, coach, and trader. He specializes in technical analysis of major currency pairs and cryptocurrencies, using chart patterns, trend structure, and key indicators to frame trading scenarios for Forex and digital asset markets. Crispus has worked with well-known brokers including ATFX, easyMarkets, and OctaFX, and his market commentary has been published widely on platforms such as Seeking Alpha, InvestingCube, Capital.com, and Invezz.
As seen on: SeekingAlpha, Macrostreet.com, Invezz.com, Forbes, Investing.com, Marketwatch, Crypto.news
