Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1710.
Add a stop-loss at 1.1500.
1-3 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1500.
Add a stop-loss at 1.1710.
The EUR/USD pair bounced back as investors bought the dip following last Friday’s retreat when Kevin Warsh delivered his first statement as the Federal Reserve Chairman at the Jackson Hole Symposium. It rose to 1.1615, up modestly from last Friday’s low of 1.1575.
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Key US and European Macro Data
The EUR/USD pair has risen as traders bought the recent dip that happened on Friday when Warsh delivered his statement at the Jackson Hole Symposium. In a statement, he maintained that inflation remained at an elevated level and hinted that the bank may decide to hike interest rates later this year.
Inflation may continue rising now that Brent and the West Texas Intermediate (WTI) have rebounded as kinetic action between the US and Iran started. The two sides have launched attacks this week, and there is a risk that this will continue in the near term. This fighting is happening as diesel prices continue rising.
The EUR/USD pair will react to several macro events in the coming days. For example, Eurostat will publish the preliminary consumer price index (CPI) report. Economists expect the report to show that the headline CPI rose from 2.9% in June to 3.3% in July, while the core CPI moved to 2.5%. These numbers come at a time when odds of ECB rate hikes are rising.
A key risk facing the European economy is that France, the second-biggest country in the region, is facing substantial public debt, with the 30-year yields rising to the highest level in decades.
The pair will also react to the upcoming JOLTS job openings numbers, which are expected to show that they dropped to 7.33 million from the previous month’s 7.35 million. This report comes before the upcoming ADP private payrolls data and the official NFP report.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair retreated from last week’s high of 1.1708 on August 20th to the current 1.1617. This retreat happened after it formed two shooting star candlestick patterns.
On the positive side for the euro, the pair remains above the 50-day Exponential Moving Average (EMA). The pair remains above the Supertrend indicator, a sign that the bullish trend remains intact.
Therefore, the pair will likely remain in an uptrend as long as it is above these indicators. If this happens, the next key level to watch will be last month’s high of 1.1708. A move above that level will point to more upside. On the other hand, a drop below the support of 1.1580 will invalidate the bullish outlook.
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