Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1855.
Add a stop-loss at 1.1600.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1600.
Add a stop-loss at 1.1855.
The EUR/USD pair has pulled back in the past few days, moving from last month's high of 1.1855 to the current 1.1720. This retreat happened after the recent Federal Reserve and the European Central Bank (ECB) interest rate decisions.
US Non-Farm Payrolls Data Ahead
The EUR/USD pair dropped after the Federal Reserve and the European Central Bank delivered their interest rate decisions last week. In his final meeting, Jerome Powell maintained that the economy was facing major challenges as the war continued.
He hinted that the bank was concerned about economic growth as the war continued. At the same time, he hinted that the bank may cut interest rates later this year if the weakness continued.
The European Central Bank (ECB) also left interest rates unchanged. However, the Christine Lagarde bank hinted that it might hike interest rates in the June meeting. If this happens, the bank may lift rates from the current 2.0% to 2.25%. Analysts expect the upcoming headline consumer price index rose to 3.0% in April as energy prices continued rising. As such, there are signs that the Fed and the ECB will have a divergence.
The EUR/USD pair will next react to the upcoming macro data from Europe and the United States. The US will publish the upcoming JOLTs job openings, new home sales, and ISM services PMI data on Tuesday. Also, the US will release the non-farm payrolls (NFP) data on Friday, which will help the Fed determine the next interest rate decision.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD pair rebounded from a low of 1.1412 on March 13 to the current 1.1720. It has remained above the 50-day and 50-day Exponential Moving Averages (EMA).
The pair has formed a bullish flag pattern, which is made up of a vertical line and a descending channel. This pattern points to more upside in the near term.
The pair has remained above the Supertrend indicator, a sign that bulls are in control. Therefore, the pair will likely rebound, potentially to the April high of 1.1855. A move above that level will point to more gains, potentially to 1.200.