EUR/USD Signal Today 08/07: To Retest 1.1565 (Chart)

(MENAFN- Daily Forex) Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.1565.
• Add a stop-loss at 1.1950.
• Timeline: 1-3 days.

Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.1950.
• Add a stop-loss at 1.1565.

The EUR/USD exchange rate remained in a tight range after the latest European retail sales data. It was trading at 1.1730 on Tuesday, down from the year-to-date high of 1.1825.

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The EUR/USD pair wavered after a senior European official confirmed that the bloc was nearing a trade deal with the United States. Olof Gill, the EU Spokesperson, said that the two sides were at the beginning of the endgame for an agreement in principle.

The EU has said that it was open to a 10% universal tariff on all goods brought to the US. It, however, wants to have some carveouts on some key sectors like commercial aircraft, pharmaceuticals, and alcohol. It is also seeking for quotas and exemptions on the automobile and steel and aluminium sectors.

A deal between the two sides will be a good thing for the European Union because of the vast amount of goods it sells to the United States. It would also help it to avoid an escalation that would push tariffs to 50% as Trump had threatened.

The EUR/USD pair reacted to the latest European retail sales data, which confirmed that the bloc was slowing. In a report, Eurostat said that the retail sales dropped by 0.1% in May, confirming that the bloc's economy deteriorated in the second quarter.

Still, most analysts expect the European Central Bank (ECB) will maintain interest rates intact in the next meeting. It has been the most aggressive central banks in cutting rates after it slashed them nine times this cycle.

There will be no major economic data from the United States and Europe on Tuesday. Therefore, traders will focus on the upcoming FOMC minutes, which will provide more color about the last meeting.

EURUSD Chart by TradingViewEUR/USD Technical Analysis

The daily chart shows that the EUR/USD exchange rate has pulled back in the past few days, moving from the year-to-date high of 1.1826 to the current 1.1738. It remains above the key support level at 1.1565, the highest point on April 21.

The pair has moved above the 50-day and 100-day Exponential Moving Averages (EMA), meaning that the uptrend is still intact. However, the two lines of the MACD indicator are about to form a bearish crossover, while the Relative Strength Index (RSI) has pointed downwards.

Therefore, the pair will likely drop and retest the support at 1.1565, and then resume the uptrend. This performance is known as a break-and-retest and is a common bullish continuation.

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