Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1450.
Add a stop-loss at 1.1750.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1750.
Add a stop-loss at 1.1450.
The EUR/USD exchange rate continued its strong downward trend this week, reaching its lowest since November last year as the crisis in the Middle East accelerated. It also dropped as President Donald Trump ordered an end of trade between the US and Spain. It was trading at 1.1613, down from the year-to-date high of 1.1613.
US Jobs Data and Geoplitical Risks
The EUR/USD exchange rate continued its strong downward trend as demand for the US dollar accelerated amid soaring geopolitical risks in the Middle East. Iran continued firing missiles across several countries in the region, while the US focused on its bombing campaign in Iran.
Analysts believe that this war will continue in the foreseeable future as the three sides - Iran, United States, and Israel - remain adamant about their goals.
The pair continued falling as the crisis led to a surge in crude oil prices, with Brent surging to $85, up substantially from the year-to-date low of $55. Natural gas prices have also surged, with European ones soaring by over 30% this year. The rising energy prices mean that inflation could tick up in the coming months, making it hard for the Federal Reserve to cut interest rates.
The EUR/USD pair also retreated after Trump warned about trade with Spain, which has denied the US access to its locations in this war. In a statement, he noted that the US will stop doing business with Spain for the time being. Data shows that the two sides do trade worth over $46 billion a year, with the US exporting goods worth $26 billion.
The next important EUR/USD pair will come from ADP, which will publish its private payrolls data. Economists see the report showing that the economy created 50k jobs in February. Another report will be the services and composite PMI from the US and Europe.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair continued its strong downward trend, moving from a high of 1.2083 to a low of 1.1532. It slumped to the lowest level since November last year.
The pair has now moved below the 23.6% Fibonacci Retracement level at 1.1635. It has also dropped below the Strong, Pivot and Reverse point of the Murrey Math Lines.
It has also retreated below the 50-day Exponential Moving Average as the Average Directional Index (ADX) rose to 21. A rising ADX is a sign that a trend is gaining momentum.
Therefore, the pair will likely continue falling in the foreseeable future as the war in Iran continues. The next key target to watch is the 38.2% Fibonacci Retracement level at 1.1360.