Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0815.
- Add a stop-loss at 1.0750.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0750.
- Add a stop-loss at 1.0810.
The EUR/USD exchange rate held steady on Monday and Tuesday morning as focus remained on the recent weak US economic numbers and their impact on the Federal Reserve. It was hovering at 1.0775, a few points below Friday’s high of 1.0810.
Federal Reserve speakers ahead
The EUR/USD pair has risen modestly in the past few days after a series of weak economic numbers from the United States. Data revealed that consumer confidence has slumped to its lowest point since 2022.
Additional numbers showed that the manufacturing and services PMIs dropped to the contraction zone in April. And on Friday, a report revealed that the economy created 175k jobs in April. While that was a good reading, it was lower than expectations.
Therefore, the focus among traders this week will be statements by Federal Reserve officials who will provide more information on what to expect this year.
In a statement on Monday, Thomas Barkin, the head of Richmond Fed said that he expects rates to remain higher for long in a bid to bring inflation to 2%. James Williams, the head of New York Fed, said that he expects rate cuts to start later this year.
Fed’s Neel Kashkari will talk on Tuesday followed by Mary Daly, Austan Goolsbee, and Laura Logan later this week. These statements will come a week after the Fed left interest rates unchanged between 5.25% and 5.50%.
The EUR/USD pair wavered after the strong European composite and services PMI numbers. According to S&P Global, the country’s composite PMI rose from 50.3 in March to 51.7 in April. The services PMI rose from 51.5 to 53.3, also higher than the expected 52.9.
These numbers will likely not change the view that the European Central Bank (ECB) will start cutting interest rates in June.
EUR/USD technical analysis
The EUR/USD pair has rebounded after bottoming at 1.0600 in April. It bounced back to a high of 1.0810 after the weak US economic numbers. On the 4H chart, the pair is hovering near the 50% Fibonacci Retracement level.
It has also risen above the Woodie pivot point and the key resistance point at 1.0752, its highest swing on April 26th. By moving above that level, the pair invalidated a double-top pattern. The Relative Strength Index (RSI) has continued rising and is at its highest point since March 12th.
Therefore, the pair will likely remain in this range on Tuesday since there will be no major event from the US and Europe. The key support and resistance points to watch will be at 1.0750 and 1.0810.
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