Bullish view
Top Regulated Brokers
Buy the EUR/USD pair and set a take-profit at 1.1622.
Add a stop-loss at 1.1450.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1450.
Add a stop-loss at 1.1622.
The EUR/USD pair rose to its highest level since June 17 after Donald Trump delayed his planned attacks against Iran, citing interventions by Iran and other Middle East countries. It also jumped after last week’s Federal Reserve interest rate decision and the latest US PCE data. It has soared by over 1.5% from its lowest level this year.
Trump Pauses Planned Attacks Against Iran
The EUR/USD pair jumped after the Federal Reserve delivered its interest rate decision on Wednesday. As was widely expected, the Fed decided to leave interest rates unchanged between 3.50% and 3.75%. Three officials voted to hike interest rates, possibly citing the elevated inflation.
The pair also jumped after the US published the latest Personal Consumption Expenditures Price Index (PCE) report. This report showed that the PCE rose 3.7% in the 12 months through June after advancing by 4.1% in May.
This increase, which was in line with expectations, happened as the US-Iran Memorandum of Understanding (MoU) pushed oil prices much lower in June. Therefore, there is a risk that the index will tick higher in the upcoming report as gasoline prices moved above $4 in July.
The EUR/USD is also reacting to Trump’s decision to pause his attacks against Iranian infrastructure. Trump cited calls from countries in the Middle East, including Iran, for requesting the pause. Before that, he had threatened to start a major operation targeting Iranian infrastructure.
Iran had threatened to launch attacks against key targets in the region, including key infrastructure projects like desalination and power plants. Such a move would have led to higher oil prices. Today, oil prices continued their strong downward trend.
Looking forward, the next key catalysts for the EUR/USD pair will be the upcoming US and European manufacturing PMI numbers. The most important report this week will be the upcoming US nonfarm payrolls (NFP) report.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has rebounded in the past few days, moving from a low of 1.1350 to 1.1530 today. This rebound happened after the pair formed a double-bottom pattern, a common reversal sign. It has now moved above the crucial resistance level of 1.1483, the neckline.
The pair has now jumped above the 50-day Exponential Moving Average (EMA), a sign that bulls are prevailing. Also, the Relative Strength Index (RSI) has jumped to 62, its highest level since April this year.
Therefore, the pair will likely continue rising, potentially to 1.1622, its highest point on June 16. This rebound will likely happen as traders attempt to fill the fair value gap formed on June 17.