Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.2000.
- Add a stop-loss at 1.1750.
- Timeline:1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1750.
- Add a stop-loss at 1.2000.
The EUR/USD exchange rate continued its recent rally and crossed the important resistance level at 1.1805 as the US dollar retreated and as the Greenland crisis eased. It has jumped by 2.10% from its lowest point this month.
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US Dollar Drops as the Greenland Crisis Eases
The EUR/USD pair continued rising after Donald Trump ended his tariff threat on some notable European countries like Germany, France, and Denmark.
He said that after meeting with the head of NATO at the World Economic Forum in Davos, Switzerland. Most importantly, he ruled out using force to take Greenland, an island controlled by Denmark.
The pair also rose as traders waited for key macro data from the United States, the European Union, and the Federal Reserve interest rate decision.
The first economic data to watch will be the US consumer confidence report, which will come out on Tuesday.
Economists polled by Reuters expect the report to show that confidence rose slightly to 90.1 from the previous 89.1. Confidence has improved in the past few months as energy prices and mortgage rates have retreated.
The other major data will come out on Wednesday when Eurostat will publish the latest consumer and business confidence numbers.
Most importantly, the Federal Reserve will publish the first interest rate decision of the year on Wednesday. This decision will come a month after the Fed delivered its third interest rate cut.
Economists believe that the Fed will not be in a hurry to cut interest rates this year as the economy is doing well. It expanded by 4.4% in the third quarter, and analysts believe that the economy expanded by 5% in the fourth quarter.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD exchange rate rose to a high of 1.1827, its highest level since September 17. It has remained above the 50-day Exponential Moving Average (EMA).
The pair has moved above the key resistance level at 1.1800, the upper side of the ascending triangle pattern, a common bullish continuation sign.
Also, the Percentage Price Oscillator (PPO) and the Relative Strength Index (RSI) have continued rising. Therefore, the pair will likely continue rising as bulls target the key resistance level at 1.200.
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