Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1500.
- Add a stop-loss at 1.1800.
- Timeline: 1-2 days.
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1800.
- Add a stop-loss at 1.1500.
The EUR/USD pair exchange rate remained under pressure, moving from a high of 1.1805 in December to the current 1.1637. It has dropped to its lowest level since December 10th as traders reflect on the recent US macro data.
US Dollar Rises as Risks Rise
The EUR/USD exchange rate has remained under pressure in the past few days as the US dollar rebound accelerated. The main risk was based on geopolitics as the ongoing protests in Iran and the potential of Donald Trump’s response.
This crisis could continue after the US started to evacuate personnel from a military base in Qatar, which has about 10,000 troops. Iran has threatened to target US bases in the region if it is attacked by the United States, a move that will lead to higher oil prices.
The EUR/USD pair retreated after the US released the latest retail sales and producer price index (PPI) data. These numbers showed that the country’s retail sales rose by 3.3% in December, a sign that consumer spending improved.
Top Regulated Brokers
More data showed that the headline PPI eased from 3% in November to 2.8%, while the core PPI remained at 2.9%. The producer and consumer inflation report has remained above the Federal Reserve's target of 2.0%.
The EUR/USD pair will react to the upcoming Spanish inflation data and the latest industrial production data. Also, the US will publish the latest export and import prices data, and the New York and the Philadelphia manufacturing producer index.
The pair will also react to the potential Supreme Court decision on Donald Trump's tariffs, which was scheduled on Wednesday.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD exchange rate has retreated in the past few days, moving from a high of 1.1805 in December to the current 1.1642. It has remained below the 50-day and 25-day Exponential Moving Averages (EMA).
The pair has formed a head-and-shoulders pattern, a common bearish reversal sign in technical analysis. The current retreat is happening after it formed a right shoulder.
Meanwhile, the Relative Strength Index (RSI) and the MACD have continued moving downwards. Therefore, the pair will likely continue falling as sellers target the key support level at 1.1500. The bearish outlook will be invalidated if it moves above the key resistance level at 1.1800.
Ready to trade our daily Forex signal? Check out the best forex brokers in Europe worth using.