Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1050.
- Add a stop-loss at 1.0900.
- Timeline: 1 day.
Bearish view
- Set a sell-stop at 1.0925 and a take-profit at 1.0825.
- Add a stop-loss at 1.1050.
The EUR/USD pair continued rising after the relatively hawkish statement by Christine Lagarde, the European Central Bank (ECB) chair. The pair rose to a high of 1.0976, the highest point since June 22nd. It has risen by more than 1% from the lowest point on Friday.
ECB to keep hiking rates
The ECB will continue hiking interest rates in a bid to fight consumer and producer inflation. In a speech in Portugal, Christin Lagarde said that the central bank had already done a lot to fight inflation by hiking rates from minus 0.5% to 3.5%. But she cautioned that the bank has more tightening to do since prices remained uncomfortably high.
Lagarde said that the first phase of inflation was nearing its end. In this phase, the cost of supply shocks led to higher inflation. Now, the bloc is facing the second phase of inflation driven by soaring labor costs. The most recent data showed that the wage price index has been rising steadily in the past few months. Now, the ECB expects that the wage index will rise by 14% by 2025.
The EUR/USD pair rose even after the strong economic data from the United States. According to the Conference Board, consumer confidence jumped from 102.5 in May to 109.7 in June. This increase was higher than the median estimate of 104. Consumer confidence is an important number since it is a good predictor of consumer spending.
Additional data showed that new home sales jumped from 680k in April to 763 million in May. Again, this increase was higher than the median estimate of 675k. These numbers show that the housing sector is doing well. Further, the house price index rose from 0.5% in March to 0.7% in April.
Further data revealed that durable and core durable goods orders rose in May. The headline and core durable goods rose by 1.7% and 0.6%, respectively.
EUR/USD technical analysis
The EUR/USD pair has made a strong bullish trend in the past few days. On the 4H chart, the pair moved above the first support level of the Andrews Pitchfork indicator. It has also moved to the 61.8% Fibonacci Retracement level.
The EUR/USD pair moved above the 50-period moving average while the Relative Strength Index (RSI) has moved above the neutral point of 50. Therefore, the pair will likely continue rising as buyers target the next level at 1.1013, the highest point last week. A move above this level will see it rise to the next resistance point at 1.1100.
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