Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1850.
- Add a stop-loss at 1.1575.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1575.
- Add a stop-loss at 1.1850.
The EUR/USD exchange rate continued rising and is hovering at its highest level since 2021 as the US dollar index crash intensified. It was trading at 1.1715 on Monday as traders waited for the upcoming US and European economic numbers.
Key US Economic Data Ahead
The EUR/USD exchange rate rallied as concerns about the Federal Reserve remained. The main concern is recent media reports that showed that Donald Trump was considering undercutting Jerome Powell by announcing the next Fed Chair in waiting.
Trump is considering officials like Christopher Waller, Kevin Warsh, Kevin Hassett, or even Treasury Secretary Scott Bessent. By announcing a dovish nominee long before Powell’s term ends, Trump aims to undercut his long-term statements.
Trump has accused Jay Powell of not cutting interest rates even though inflation has fallen recently. In his recent statements, including at the House of Representatives and the Senate last week, Powell said that the bank was waiting for more information on inflation following Donald Trump’s tariffs.
The Fed is largely divided on what its next move should be. While most officials are recommending caution, some, like Christopher Waller and Michele Bowman, have supported cutting interest rates as early as in the July meeting.
Looking ahead, the EUR/USD pair will react to several important events. First, there are signs that the Senate will pass Donald Trump’s Big Beautiful Bill after it passed an important stage on Sunday.
Second, the US and Europe are expected to announce a trade deal this week as Donald Trump’s deadline approaches. A deal would be bullish for the EUR/USD because it would remove the key risk that has existed in the past few weeks.
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Further, the EUR/USD pair will react to key economic data like the upcoming US nonfarm payroll (NFP), flash manufacturing and services PMI data, and European inflation report.
EUR/USD Technical Analysis
The EUR/USD exchange rate has been in a strong rally in the past few months. It recently moved above the important resistance level at 1.1200, the upper side of the cup-and-handle pattern.
The pair also moved above the resistance level at 1.1575, invalidating the double-top pattern, a popular bearish reversal sign. It remains above the 50-day and 100-day moving averages, while the Relative Strength Index (RSI) and the MACD have all pointed upwards.
Therefore, the pair will likely continue rising as bulls target the next key resistance at 1.1850. A drop below the support at 1.1575 will invalidate the bullish view.
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