Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.2080.
- Add a stop-loss at 1.1790.
- Timeline:1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1790.
- Add a stop-loss at 1.2080.
The EUR/USD exchange rate rebounded and reached its highest level since January 30th. It rose to a high of 1.1915, up sharply from last week’s low of 1.1767 as focus shifts to key macro data from the United States, including retail sales, non-farm payrolls, and inflation.
Top Regulated Brokers
US Dollar Slips Ahead of Key Macro Data
The EUR/USD exchange rate rose sharply as the US dollar retreated and long-term bond yields soared after China urged its banks and other financial services companies to reduce their US government bond holdings.
This guideline will likely see these companies sell US bonds worth billions of dollars, which will likely put the greenback under pressure in the coming months.
Looking ahead, the EUR/USD pair will react to the upcoming US macro data. The Commerce Department will release the latest retail sales data, which will provide more information about the economy. Economists expect the data to show that the headline retail sales rose 2.9% in December, a slowdown from the previous 3.3%.
The US will then release the non-farm payrolls (NFP) data on Wednesday. Economists expect the report to show that the economy added 70k jobs in January from 50k in the previous month. The unemployment rate is expected to come in at 4.4%.
Most importantly, the US will release the latest Consumer Price Index (CPI) report on Friday. The most recent estimates show that the headline CPI dropped from 2.7% in December to 2.5% in January, while the core CPI fell from 2.6% to 2.5%. If these estimates are correct, it may incentivize the Fed to start cutting interest rates in the coming months.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD pair bounced back, reaching its highest level since January 30th. It has remained above the ascending trendline, which connects the lowest swings since May last year.
The pair completed a break-and-retest pattern by moving back to the key support level at 1.1797, its highest level in December last year. It also moved above the 50-day Exponential Moving Average (EMA).
Therefore, the pair will likely continue rising as bulls target the year-to-date high of 1.2080. A move above that level will point to more gains, potentially to the key target at 1.2100. A drop below the key support level at 1.1795 will invalidate the bullish outlook.