Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1000.
- Add a stop-loss at 1.0800.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0835 and a take-profit at 10765.
- Add a stop-loss at 1.0950.
The EUR/USD exchange rate bounced back on Tuesday after the relatively mixed economic numbers from the United States. The pair rose to a high of 1.0871, its highest point since August 24th.
Mixed US economic data
The main trigger for the EUR/USD comeback was the mixed data from the US and a stimulus package in Germany. Data by the Conference Board revealed that consumer confidence dropped in August as gasoline prices rose. The confidence figure dropped from 117 in July to 106 in August. It had risen in the previous two months.
Another report revealed that the job market was cooling. Job vacancies dropped from 9.2 million in June to 8.8 million in July. This decline was lower than the median estimate of 9.5 million openings.
The vacancy numbers came a day before ADP is set to publish its private payrolls data estimates. The Bureau of Labor Statistics will release August’s Non-Farm Payrolls (NFP) on Friday.
Meanwhile, housing data revealed that home prices jumped for the fifth straight month even as mortgage rates jumped. The house price index in 20 major cities increased by 0.9% on a MoM basis. Recent data shows that the average 30-year mortgage has risen to 7.23%.
The EUR/USD pair also rose after Germany introduced a major stimulus deal to support the slowing economy. The government agreed to provide a 7 billion euro corporate tax relief.
There are questions about the German economy as its slowdown accelerates. It is in a stagflation, which is accompanied by low growth and high inflation. The most recent estimates by the OECD and the IMF estimate that it will be the slowest developed country this year.
Germany’s key challenge is that its industrial base is losing traction against other countries like Japan and China.
EUR/USD technical analysis
The EUR/USD exchange rate made a strong recovery in the overnight session. On the 4H chart, the pair rose and retested the upper side of the descending channel shown in black. It also rose slightly above the 25-period and 50-period moving average. It has also entered the Ichimoku cloud indicator while the Stochastic Oscillator moved to the overbought level.
The EUR/USD pair will likely continue rising as buyers target the key resistance point at 1.0100. This view will be confirmed if it moves above the Ichimoku cloud.
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