Bullish view
Buy the EUR/USD pair and set a take-profit of 1.1525.
Add a stop-loss at 1.1325.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1325.
Add a stop-loss at 1.1525.
The EUR/USD pair bounced back this week as the US dollar sell-off retreated. It jumped to 1.1425 on Tuesday, a few pips above this month’s low of 1.1325. Focus now shifts to the upcoming European Central Bank (ECB) summit in Portugal where key officials from Europe and the US will deliver statements.
ECB Summit and Key US Data
The EUR/USD pair rose slightly as the US dollar continued its recent sell-off, with the DXY Index dropping to $101.10. The dollar has pulled back because of profit-taking among investors after it soared by nearly 7% from its lowest level this year.
It slipped after the US published the latest Personal Consumption Expenditure (PCE) data, which showed that inflation rose at a slower pace than expected. Analysts expect that the PCE figure has peaked now that it reached a high of 4.1% last month.
The EUR/USD pair will next react to the upcoming US macro data, which will help the bank when making its interest rate decision. The Conference Board will publish the latest consumer confidence report, with economists expecting the figure to show that it rose from 93.1 in May to 94.2 in June this year.
Consumer confidence is an important report because it is a leading indicator to the state of the economy since spending is the biggest part of GDP. It has likely risen slightly after the recent strong US jobs data and the fact that inflation is cooling.
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The US will also publish the latest house price index (HPI) report, which is expected to show that prices rose by 1.8% this month.
Several European Central Bank officials like Philip Lane and Isabel Schnabel will speak today and provide more information on what to expect. Their statements will come from Portugal, where the ECB is holding its annual symposium.
EUR/USD Technical Analysis
The EUR/USD pair has rebounded in the past few days, moving from a low of 1.1324 on June 24 to the current 1.1425. It has now crossed the important resistance level of 1.1412, the lowest swing on March 13 this year.
The Relative Strength Index (RSI) has reversed from the oversold level of 27.40 to the current 38.35. It is still pointing upwards. The pair also remains below the 50-day and 25-day moving averages.
Therefore, the path of least resistance is upwards, with the next key target being at 1.1500. It will then resume the downward trend as the bullish trend lose momentum.
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