Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1650.
Add a stop-loss at 1.1500.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1500.
Add a stop-loss at 1.1650.
The EUR/USD pair wavered after the US released weak macro numbers and as global government bond yields jumped. It was trading at 1.1575, a few points below this week’s high of 1.1612 as focus shifted to the upcoming Federal Reserve minutes of the last meeting.
US and European Bond Yields are Soaring
The EUR/USD pair wavered as traders reacted to the relatively weak US macroeconomic data. A report showed that the US housing starts dropped by 12.4% in July after soaring by 19.7% in the previous month. They moved from 1.41 million from 1.23 million in June.
More data showed that US export and import prices dropped slightly in July. The import price index dropped to 5.9%, while the export price figure fell from 8.3% to 7.6% in July. US industrial and manufacturing production numbers also retreated during the month.
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These numbers came after the US released weak nonfarm payrolls (NFP) and retail sales reports. As a result, odds that the Federal Reserve will hike interest rates later this year retreated on Polymarket. The upcoming meetings will provide more details about the last meeting and what officials deliberated.
The EUR/USD pair is also reacting to the ongoing trends in the bond market, where yields in the US and European countries have soared. In the US, the 30-year yield jumped to the highest level in 20 years.
Similarly, in Germany, the 30-year yield soared to 3.79%, its highest point in years. Also, the 30-year has jumped in the last three days, reaching a high of 4.90%, while in Italy, it moved to 4.88%. In Spain, it moved to 4.41%. These yields have jumped in the past few months as oil prices have remained at an elevated level.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has held steady in the past few weeks, and is now hovering near its highest level since June. It has remained stable above the psychological level of 1.1500.
The pair has also formed an ascending channel and a small shooting star pattern, a common bearish reversal sign. It remains above the 50-day Exponential Moving Average (EMA).
The pair will likely remain inside this range today, and possibly experience a big move after the Federal Reserve minutes. The key support and resistance levels to watch will be at 1.1500 and 1.1650.
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