Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1900.
Add a stop-loss at 1.1600.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1600.
Add a stop-loss at 1.1900.
The EUR/USD exchange rate has pulled back in the past two consecutive days as investors reflect on the next stages of the ongoing US-Iran war. It retreated to 1.1710, down from this month’s high of 1.1847.
US Flash PMI and Initial Jobless Claims Data
The EUR/USD exchange rate remained under pressure as the US dollar rose slightly this week. Data shows that the US Dollar Index (DXY) has jumped to $98.55 from this month's low of $97.
The ongoing US dollar rally coincided with the ongoing crude oil and bond yields rose. Brent, the global benchmark, rose to $102, while the West Texas Intermediate (WTI) moved to $99. The ten-year yield rose to 4.30%, while the 2-year rose to 3.80%.
This price action happened after President Donald Trump extended the ceasefire with Iran indefinitely. Analysts expect that the two sides will resume fighting in the coming weeks, which will lead to higher oil prices and inflation.
The next important catalyst for the EUR/USD pair will be the upcoming flash manufacturing and services PMI numbers. Economists expect the report to show that European manufacturing PMI dropped from 51.6 in March to 50.8 in April.
Another report will likely show that the manufacturing PMI rose to 52.5 in April from the previous 52.3. A PMI reading of 50 and above is a sign that a sector continued growing despite the ongoing war.
The pair will also react to the upcoming US initial and continuing jobless claims numbers. Economists expect the upcoming report to show that initial jobless claims rose by 212k last week.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD pair has pulled back in the past few days, moving from a high of 1.1847 to the current 1.1715, its lowest level since April 13.
On the positive side, the pair remains above the 50-day and 100-day Exponential Moving Averages (EMA), which have made a bullish crossover. It has remained above the end Supertrend indicator.
Therefore, the pair will likely resume the uptrend in the near term, potentially to this month’s high of 1.1847. A move above that level will point to more gains, potentially to the psychological level of 1.1900.
The bullish outlook will become invalid if it moves above the key support level at 1.1675.