EUR/USD Forex Signal 07/08: Targets 1.1825 High (Chart)

(MENAFN- Daily Forex) Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.1820.
• Add a stop-loss at 1.1550.
• Timeline: 1-2 days.

Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.1550.
• Add a stop-loss at 1.1820.

The EUR/USD exchange rate staged a strong comeback this week as the US Dollar Index (DXY) crashed. It was trading at 1.1660, its highest point since July 28 and 2.40% from the lowest point this year Dollar Index has Crashed

The EUR/USD pair jumped as the US Dollar Index plunged from a high of $100.20 earlier this month to the current $98.20, its lowest level in over two weeks.

The US dollar has dropped as the odds that the Federal Reserve cutting interest rates in the September meeting. In a statement, Lisa Cook, a Fed Governor, said that the July jobs report was concerning and that the revisions were the turning point.

In a separate statement, Neel Kashkari, a Fed official, said that the jobs numbers signaled that the economy was slowing and that a rate cut was needed in the near term. Therefore, market participants expect the bank to cut rates in the September meeting.

The EUR/USD pair also rose after a report showed that Europe's retail sales rebounded in June. The volume of sales rose by 0.3% after falling by 0.3% in May. This growth translated to a YoY growth rate of 3.1%.

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These numbers, together with the recent strong manufacturing and services PMIs mean that the bank will not have an incentive to cut interest rates soon.

The key catalyst for the EUR/USD pair will be the upcoming Italian consumer inflation report and the US initial jobless claims data. It will also react to the upcoming statement by Raphael Bosttic, a Fed official.

EURUSD Chart by TradingViewEUR/USD Technical Analysis

The daily chart shows that the EUR/USD pair has been in a strong bullish breakout in the past few days. It moved from a low of 1.1395 last week to the current 1.1655, its highest level since July 28.

The pair has moved above the 500-day moving average, while the Relative Strength Index (RSI) has jumped above the neutral point of 50. It also flipped the crucial resistance level at 1.1572, its highest point on April 21, into a support.

Therefore, the EUR/USD pair will likely continue rising as buyers target the year-to-date high of 1.1828, which is 1.50% above the current level. A move below the support at 1.1572 will invalidate the bullish outlook.

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