Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1800.
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 1.1800.
The EUR/USD exchange rate retreated slightly as geopolitical risks rose, pushing crude oil prices higher. It dropped to 1.1690 on Tuesday, down slightly from last week's high of 1.1850 as focus shifts to the upcoming Christine Lagarde speech and US macro data.
Christine Lagarde Speech and Key US Macro Data Ahead
The EUR/USD pair retreated slightly as the geopolitical situation worsened on Monday, after reports emerged that the Iranians had struck a US naval vessel. Also, Iran targeted a major oil infrastructure project in the United Arab Emirates (UAE).
These actions led to a surge in crude oil prices, with Brent and the West Texas Intermediate (WTI) rising to $114 and $106, respectively. This happened after Trump issued a statement in which he pledged to guide ships cross the Strait.
The next key catalyst for the EUR/USD pair will be the upcoming Christine Lagarde speech, in which she will talk on the state of the European economy.
It will be the first statement since the bank delivered its interest rate decision last week. In it, the bank decided to leave interest rates unchanged, with the statement hinting that it will hike in the next meeting.
The US will also publish some important macro data, including the latest JOLTS job openings report, which will provide more information about the labor market. Economists expect the upcoming report to show that the economy had 6.83 million job openings, down from 6.88 million.
The other main catalysts for the pair are the latest new home sales and the ISM non-manufacturing PMI reports, which will provide more information about the state of the economy. Additionally, the US will publish the latest non-farm payrolls (NFP) data on Friday this week.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD pair has retreated in the past few weeks, moving from a high of 1.1850 to the current 1.1685. It has formed a shooting star candlestick pattern, which is made up of a small body and a long upper shadow. It is one to the most common bearish reversal signs in technical analysis.
On the positive side, the pair has settled at the 50-day Exponential Moving Average (EMA) and the Supertrend indicator. It has also formed a bullish flag pattern, which is a common continuation sign in technical analysis.
Therefore, the pair may resume the uptrend in the near term, potentially to last month’s high of 1.1850. On the other hand, a drop below the key support at 1.1630 will invalidate the bullish outlook.