Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.200.
- Add a stop-loss at 1.1600.
- Timeline: 1-3 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1600.
- Add a stop-loss at 1.2000.
The EUR/USD exchange rate continued its strong surge, hitting its highest level since September 2021. It jumped to a high of 1.1770, up by 15.67% from its lowest point this year.
Key Economic Data Ahead
The EUR/USD pair has been in a strong rally this year as the US dollar index plunge gained steam. The index, which measures the dollar’s performance against a basket of currencies, plunged to a low of $96.95, down by nearly 12% from the year-to-date high.
This performance is likely because some investors see the euro as a better safe-haven currency because of some of Donald Trump’s policies, like the unilateral tariffs against all countries.
There are also concerns about central bank independence after Trump’s attacks. The latest one is the ongoing speculation that he will seek to undermine Jerome Powell by appointing his successor months in advance.
The EUR/USD pair has also soared as concerns about the US debt escalated, with estimates showing that the Big Beautiful Bill will lead to a wide trade deficit. This is happening a few months after the US lost its triple-A credit rating.
The next key catalyst for the pair will be the upcoming consumer price index (CPI) data. Economists expect the data to show that the headline consumer inflation rose from 1.9% in May to 2% in June, while the core inflation remained unchanged at 2.3%.
The other key catalyst will be the US ISM manufacturing PMI data, which will provide more information about the impact of Trump’s tariffs. The US will also release the JOLTs job vacancies data and the upcoming statement from the Federal Reserve Chair.
Powell will likely reiterate his view that the bank will maintain a wait-and-see approach before deciding when to cut rates.
EUR/USD Technical Analysis
The weekly chart shows that the EUR/USD exchange rate has been in a strong bullish trend in the past few months. It has jumped from a low of 1.0180 in January to 1.1780 today.
It has recently crossed the important resistance level at 1.1568, the highest swing on April 21, invalidating a double-top pattern. Also, the pair has remained above the 50-week exponential moving averages and the 78.2% retracement point.
Therefore, the pair will likely continue rising as bulls target the psychological point at 1.200. A drop below the support at 1.1600 will invalidate the bullish view.
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Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.