Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1300.
- Add a stop-loss at 1.1200.
- Timeline: 1 day.
Bearish view
- Set a sell-stop at 1.1215 and a take-profit at 1.1150.
- Add a stop-loss at 1.1300.
The EUR/USD exchange rate held steady on Tuesday morning ahead of the upcoming US retail sales numbers. The pair rose to 1.1240, the highest level since March last year. In all, the euro has soared by over 5.66% from June’s low.
US Retail Sales Ahead
The EUR/USD pair has been in a strong bullish trend after the US published a series of weak economic numbers. Data by the Bureau of Labor Statistics (BLS) showed that the economy added 209k jobs in June, signaling that the labor market is tightening.
Data published last week revealed that the country’s inflation continued falling in June. The headline consumer price index (CPI) dropped to 3.0% in June while core inflation fell to 4.85 during the month.
These numbers mean that the Fed has a narrow path of hiking interest rates. Most economists see the economy hiking interest rates by 0.25% this month and then pause rate hikes.
The next key data to watch will be the upcoming US retail sales numbers. Economists expect the data to show that retail sales rose from 0.3% in May to 0.5% in June. They also expect that core sales rose from 0.1% in May to 0.3% in June.
The US will also publish the latest industrial and manufacturing production, Redbook, and capacity utilization numbers.
Meanwhile, analysts at Goldman Sachs slashed the probability of US entering a recession in the next 12 months. The bank’s analysts expect the Fed will be able to reduce inflation without causing an economic downturn.
Further, they sounded optimistic about the strength of the housing sector and the building of factories in the semiconductor and clean energy sectors.
EUR/USD Technical Analysis
The EUR/USD exchange rate has been in a strong upward trend in the past few months. It flipped the important resistance level at 1.1097, the highest point in April this year. The pair moved above all moving averages.
It has formed a bullish flag pattern, which is a bullish sign. The pair has also moved above the Ichimoku cloud. Therefore, there is a likelihood that the EUR to USD exchange rate will continue rising as buyers target the next key level at 1.1300. The stop-loss of this trade will be at 1.1180.
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