EUR/USD Forex Signal 23/07: Breaks Out Ahead Of ECB (Chart)

(MENAFN- Daily Forex) Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.1835.
• Add a stop-loss at 1.1650.
• Timeline: 1-2 days.

Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.1650.
• Add a stop-loss at 1.1835.

The EUR/USD exchange rate rose for three consecutive days, reaching its highest level since July 7 this year. It has jumped by 1.67% from its lowest point this month, and is hovering slightly below the year-to-date high of 1830 Rises Ahead of ECB Interest Rate Decision

The EUR/USD pair bounced back as traders waited for the upcoming ECB interest rate decision. Economists polled by Reuters expect the central bank to pause its interest rate cuts.

The bank is expected to leave the deposit facility rate unchanged at 2% and the interest rate 2.15%. In a recent statement, Morgan Stanley analysts said that they expect the statement to be similar to the last one. In this, officials will leave the possibility of additional interest rate cuts without committing to them.

The ECB is concerned about the strength of the euro. While it has helped to lower inflation, the euro's strength is hurting many of the bloc's exporter by making their products more expensive. In this case, their goods have become 10% expensive as the currency has gained.

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The ECB is also concerned about the trade relations between the US and the European Union (EU). Donald Trump has threatened that he will implement a 30% tariff on all goods from the bloc on August 1 if the two sides will not have an agreement.

The additional tariffs and the strength of the euro may affect the bloc's economic growth over time.

EURUSD Chart by TradingViewEUR/USD Technical Analysis

The EUR/USD exchange rate has been in a strong bullish rally in the past few months. It moved from a low of 1.0176 in January to a high of 1.1750. The pair has remained above the 50-day and 100-day moving averages.

It has formed a bullish flag pattern, a popular continuation sign. It moved above the upper side of the descending channel and is eying the crucial resistance level at 1.1830.

A move above that resistance level will point to more gains, with the next point to watch being at 1.1900. A move below the support at 1.1600 will invalidate the bullish outlook.

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