EUR/USD Forex Signal 09/02: Break And Retest Point ? (Chart)

(MENAFN- Daily Forex) Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.2000.
• Add a stop-loss at 1.1700.
• Timeline: 1-2 days.

Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.1700.
• Add a stop-loss at 1.2000.

The EUR/USD exchange rate pulled back last week as the US dollar staged a mild recovery and after the European Central Bank (ECB) delivered its interest rate decision., which aligned with what analysts were expecting. It was trading at 1.1820, down significantly from the year-to-date high of 1.2080.

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The EUR/USD pair has pulled back after Donald Trump nominated Kevin Warsh to become the next Federal Reserve Chairman. Warsh, if confirmed by the Senate, will replace Jerome Powell, who has fallen out of favor with the president in the past few years.

Analysts believe that Warsh will be a more hawkish Chairman based on his past views. For example, he was a key critic of Ben Bernanke's quantitative easing program that vastly increased the Federal Reserve's balance sheet after the Global Financial Crisis.

The next important catalyst for the EUR/USD pair will come out on Wednesday when the Bureau of Labor Statistics (BLS) releases the January non-farm payrolls (NFP) data. These numbers were initially scheduled for Friday but were postponed because of the partial government shutdown.

Economists expect the upcoming data to show that the economy created 70k jobs in January as the unemployment rate remained unchanged at 4.4%. A report released last week by ADP showed that the private sector created less than 30k jobs in January, a sign that the labor market is no longer growing.

The EUR/USD also reacted to the latest European Central Bank (ECB) interest rate decision, which came out on Thursday. As was widely expected, the bank decided to leave interest rates unchanged and hinted that it will hold them steady for a while. Officials maintained their calm view on the euro strength.

EURUSD Chart by TradingViewEUR/USD Technical Analysis

The EUR/USD exchange rate peaked at 1.2080 in January as the dollar crash gained steam. It has lost momentum recently and dropped to the key support level at 1.1797, its highest level in December. This is a sign that it has formed a break-and-retest pattern, a common continuation sign.

The pair remains above the ascending trendline, which connects the lowest swings since May last year. It has remained above the 50-day Exponential Moving Average (EMA).

Therefore, the most likely EUR/USD forecast is bullish, with the next key target being the year-to-date high of 1.2080. A move above that level will point to more gains to 1.2100.

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