Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.3945.
- Add a stop-loss at 1.1700.
- Timeline: 1-2 days.
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1700.
- Add a stop-loss at 1.3945.
The EUR/USD exchange rate remained relatively stable today, August 6, as traders reacted to the latest services and composite PMI numbers from the US and the European Union. It was trading at 1.1570 on Wednesday, up from last month’s low of 1.1395.
A report by the S&P Global showed that the services PMI rose from 52.9 in June to 55.7 in July. On the other hand, another report by the Institute of Supply Management (ISM) showed that the PMI fell from 50.8 in June to 50.1 in July.
These numbers mean that the US services segment was doing well as it remained in an expansion zone. A PMI reading of 50 or above indicates that a sector is performing well.
Separate data from Europe showed that the services PMI rose from 50.5 in June to 51 in July. The composite PMI, which includes data from the manufacturing and services sectors, rose from 50.6 in June to 50.9 in July.
The next key catalyst for the EUR/USD pair will be the release of Europe’s retail sales data. Economists expect the data to show that the bloc’s retail sales rose from minus 0.7% in May to 0.4% in June. They also expect the numbers to reveal that sales rose to 2.6% on an annual basis.
The EUR/USD exchange rate also reacted to a statement by Goldman Sachs. In a note, the bank’s analysts said that the Federal Reserve will deliver its interest rate cut in September.
The other key catalyst for the pair will be the potential announcement of the next Fed governor. In a CNBC statement, Trump said that he was considering either Kevin Hassett or Kevin Warsh as the successor to Governor Adriana Kugler at the Fed.
EUR/USD Technical Analysis
The EUR/USD pair has come under pressure in the past few days, moving from a high of 1.1817 to the current 1.1575. It was hovering at the 50-day Exponential Moving Average (EMA).
The pair has retested the key resistance level at 1.1560, the neckline of the slanted double-top pattern. Therefore, the EUR/USD exchange rate will likely resume the downtrend now that it has formed a break-and-retest pattern.
Therefore, the pair will likely retest this month’s low of 1.1395, its lowest point this month.
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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.