EUR/USD Forex Signal 02/06: Bullish Outlook (Chart)

(MENAFN- Daily Forex) Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.1565.
• Add a stop-loss at 1.1200.
• Timeline: 1-3 days.

Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.1200.
• Add a stop-loss at 1.565.

The EUR/USD exchange rate wavered on Monday as traders reflected on last Friday's muted personal consumption expenditure (PCE) data and escalation of the trade war. The pair was trading at 1.1347, a few points above last week's low of 1.1210.

Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Trade war concerns remain

The EUR/USD pair wavered after a report showed that consumer spending increased marginally in April as households reacted to Donald Trump's tariffs. Inflation remained muted, with the core PCE rising at the smallest margin in four years.

The PCE report has fueled calls for the Federal Reserve to cut interest rates. He made the case for cuts last week when he met with Jerome Powell at the White House, arguing that higher rates were leaving the US at a disadvantage against its peers like the European Union and China.

The Fed has insisted that it will not be in a hurry to cut rates because inflation is still a threat once the impact of tariffs emerge.

Trump ratcheted his tone, saying that he will boost tariffs on steel and aluminium from 25% to 50%, mainly affecting Germany, a top steel exporter to the United States.

The EUR/USD pair will react to any trade-related news from the US and Europe. The European Union hopes that the US will eventually reduce its levies in July when the ongoing negotiations end.

Looking ahead, there will be no major macro data on Monday. The only report to watch will come from the Institute of Supply Management (ISM), which will provide more information on the manufacturing sector. Economists expect the data to show that the manufacturing PMI remained unchanged at 48.7 in May.

The other top data to watch will come out on Tuesday when Eurostat publishes the flash inflation data. Economists see the inflation report coming in at 2.5%, down from 2.7%.

EURUSD Chart by TradingViewEUR/USD technical analysis

The EUR/USD pair has bottomed at 1.1064 in May and then bounced back to 1.1347 today. It has jumped above the key resistance level at 1.1200, the upper side of the cup-and-handle pattern, a popular bullish continuation sign.

The pair has remained above the 50-day moving average and the strong pivot reverse point of the Murrey Math Lines at 1.1230.

Therefore, the EUR/USD exchange rate will likely continue rising as bulls target the year-to-date high of 1.1565. Moving above that level will be important as it will invalidate the forming double-top pattern.

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