Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0530.
- Add a stop-loss at 1.0330.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0300.
- Add a stop-loss at 1.0500.
The EUR/USD exchange rate continued its uptrend as the US dollar index crashed to $107.38 from this year's high of $105. It jumped to a high of 1.0440, its highest point in a week.
Risk-on sentiment remains
The EUR/USD pair rebounded as the market embraced a risk-on sentiment as trade risks eased. The US has already paused its tariffs with Mexico and Canada as the countries negotiate on various topics like the border and drugs.
Analysts expect that the US will talk to China and pause these levies, which China warned were threatening the two economies. China’s response to Trump's tariffs was relatively modest as they target goods worth about $20 billion.
US stocks rebounded, with the Dow Jones Industrial Average rising by 255 points and the S&P 500 jumping by 20 points. US bond yields continued to drop, with the 10 year falling to 4.415% and the 30-year retreating to 4.65%.
The next key EUR/USD news will be the upcoming European retail sales data. Economists expect the data to show that the headline sales dropped from 0.1% in November to minus 0.1% in December. They also expect the figure rising from 1.2% to 1.9%.
In the US, the Bureau of Labor Statistics (BLS) will publish the initial and continuing jobless claims data for last week. The initial claims are expected to come in at 214k.
These numbers will come a day before the official nonfarm payroll data. Economists expect these numbers to show that the economy created 180k jobs in January while the unemployment rate remained above 4%.
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EUR/USD technical analysis
The EUR/USD exchange rate bottomed at 1.0220 and rebounded to 1.0439 ahead of the upcoming US jobs numbers. It moved above 25-day moving average and the double-bottom pattern at 1.0220. It is now approaching the neckline at 1.0530, its highest swing on January 27.
A double-bottom is one of the market's highly popular bullish reversal signs. The MACD indicator and other oscillators have all pointed upwards, a sign that it is gaining momentum.
Therefore, the pair will likely keep rising as bulls target the neckline at 1.0530. A break above that level will point to more gains, possibly to 1.0600, the lowest swing in April last year. A drop below the key support at 1.0330 will invalidate the bullish view.
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