Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1572.
- Set a take-profit at 1.1950.
- Timeline: 1-2 days.
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1950.
- Add a stop-loss at 1.1572.
The EUR/USD exchange rate continued its strong rally this week, reaching its highest level since 2021. It jumped to a high of 1.1825, up 16% from its lowest point this year and 23.6% above its 2022 lows.
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Euro gains momentum as US dollar plunges
The EUR/USD pair has been in a strong rally this week as the US dollar index plunged. The index, which tracks the US dollar against a basket of currencies, dropped to $96.45, down from the year-to-date high of $110.
This price action accelerated after ADP published the latest jobs numbers. In its report, the economy lost over 33,000 jobs in June as concerns about Donald Trump’s tariffs continued.
Many companies have either paused hiring and replacing departing workers as they observe the impact of Donald Trump’s tariffs.
The next important catalyst for the EUR/USD exchange rate will be the official nonfarm payrolls. Economists expect the report to show that the economy created 110,000 jobs, lower than the previous 139,000.
The US unemployment rate is expected to come in at 4.3%, up from 4.2% in the previous month. Further, the US will publish the latest initial and continuing jobless claims data.
It will also release the upcoming US exports and imports data, which will also shed more color on the impact of Trump’s tariffs. At the same time, the ISM and the S&P Global will release the latest services PMI data.
Analysts have a mixed opinion of the US dollar. In a recent statement, Morgan Stanley predicted that the US dollar will plunge to $90. ING analysts, on the other hand, estimated that the dollar crash has bottomed and could start rising.
EUR/USD technical analysis
The daily chart shows that the EUR/USD exchange rate has been in a strong bull run in the past few months. It moved above the crucial resistance level at 1.1572, the highest point in April and June this year.
The pair has remained above the 50-day Exponential Moving Average (EMA). Also, the Relative Strength Index (RSI) has moved above the overbought level. Similarly, the Percentage Price Oscillator has remained above the zero line since February. With the pair being overbought, it may retreat and retest the support level at 1.1572.
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