(MENAFN- Daily Forex) Bullish view
Buy the EUR/USD pair and set a take-profit at 1.0915. Add a stop-loss at 1.0800. Timeline: 1-2 days.
Bearish view
Set a sell-stop at 1.0870 and a take-profit at 1.0800. Add a stop-loss at 1.0915.
The
EUR/USD
exchange rate wavered on Monday and on Tuesday morning as the impact of last week's European Central
bank (ECB) decision faded. The pair was trading at 1.088 on Tuesday, a few pips above Monday's low of 1.0872.
The EUR/USD pair retreated after last Thursday's
ECB interest rate decision in which, as expected, it decided to leave interest rates unchanged. In her statement, Christine Lagarde pointed to at least one rate cut if inflation continues falling. A separate survey report showed that most ECB officials expect that the bloc's inflation will remain below 2% in the next two years.
There will be no important economic events from the EU and the US on Monday. The only key event will be a statement by Philip Lane, the ECB's Chief Economist. In the past, his statements have had some major impact on the euro but since this is coming a few days after the ECB decision, its effect will be limited.
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The EUR/USD pair will also react mildly to the US existing home sales data. Instead, traders will be focusing on Friday's personal consumption expenditure (PCE) data. The PCE is the Fed's favourite inflation report because it looks at price changes in rural and urban areas.
These numbers will help to predict whether the Fed will cut interest rates in September. Most analysts expect that the Fed will leave rates unchanged in its next week's meeting/USD technical analysis
The 4H chart shows that the EUR/USD pair made a strong bearish breakout last week after rising to a high of 1.0947. It dropped and reached a low of 1.0872 on Monday, where it formed a double-bottom pattern.
The pair has dropped below the 25-period Exponential Moving Average (EMA) and the key support level at 1.0916, its highest swing in June. It has also formed a cup and handle chart pattern, a popular continuation sign. The current retreat is part of the handle section.
Therefore, the EUR/USD pair will likely resume the bullish trend in the next few days. If this happens, the next key point to watch will be the resistance at 1.0915. The stop-loss of this trade will be at 1.0870.
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