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MENAFN- Daily Forex) Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1273. Add a stop-loss at 1.1100. Timeline: 1-2 days.
Bearish view
Set a sell-stop at 1.1170 and a take-profit at 1.1100. Add a stop-loss at 1.1273.
The EUR/USD
exchange rate soared to its highest point since July 2023 as the greenback resumed its downward trend. It rose to a high of 1.1200, meaning that it has jumped by 1% this year and by 5.50% from its lowest point this year.
The pair rose even after Germany released another weak economic report. On Tuesday, data by the statistics agency showed that the economy contracted in the second quarter. It contracted by 0.1% QoQ after rising by 0.2% in the first quarter. It rose by 0.3% from the same period in 2023.
The economic slowdown was mostly because of the ongoing weakness of consumer spending, exports, and investments. This slowdown was offset by increased government spending during the quarter.
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These numbers came a day after another report revealed that business confidence eased in August. Business expectations dropped from 87 in July to 86.8 in August while business climate dropped to 86.6.
Still, the main reason for the rally was the weaker US dollar because of the rising anticipation that the Federal Reserve will start cutting interest rates in the next meeting. Jerome Powell, the Fed governor, has already hinted that the bank will lower rates in September.
What is unclear, however, is the size of the cut. This size will be determined by the upcoming economic data like Friday's personal consumption expenditure (PCE) and next week's non-farm payrolls (NFP) data. If these numbers come out weaker than expected, there is a likelihood that the bank will cut by 0.50%.
The EUR/USD pair rose after the US released a stronger-than-expected consumer confidence report. It rose from 101.9 in July to 103.3 in August, meaning that the economy is doing relatively well/USD technical analysis
The EUR/USD exchange rate has been in a strong uptrend in the past few weeks. It most recently rose above the important resistance level at 1.1140, its highest swing in December last year.
It has also moved above the key point at 1.0915, the upper side of the inverse head and shoulders pattern. The Average Directional index (ADX) has surged to 41, meaning that it has a bullish momentum.
It rose above the 50-day Exponential Moving Average (EMA). Therefore, the pair will likely keep rising as traders aim for the next crucial resistance level at 1.1273, its highest level in 2023.
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