Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.1138.
• Add a stop-loss at 1.0975.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 1.1015 and a take-profit at 1.1.0950.
• Add a stop-loss at 1.1125.

The EUR/USD pair continued its uptrend even after strong US retail sales and initial jobless claims numbers. The pair rose to 1.1047, its highest swing since December last year. It has jumped by over 4% from its April low of 1.0600.

Economic data released on Thursday sent mixed signals about the US economy, confirming that the Fed may start cutting interest rates as soon as in September. On the positive side, the country’s retail sales rose from -0.2% in June to 1.0% in July, higher than the median estimate of 0.4%.

Core retail sales, which exclude the volatile food and energy sources, rose by 0.4%, higher than the expected 0.1%. Another report showed that the number of initial jobless claims slowed by 227,000 in the previous week. These numbers meant that the labor market was not as weak as what the market was expecting.

On the other hand, more data showed that manufacturing and industrial production dropped by 0.3% and 0.6%, respectively. Therefore, economists expect the Fed to deliver a 0.25% cut in its September meeting.

The EUR/USD pair will have a muted performance this week since the US and Europe will not publish important data. The key data to watch will be the upcoming European inflation data on Tuesday. While this is an important report, its impact on the pair will be limited since the Eurostat has already published the preliminary data.

The other key catalyst for the pair will be the Federal Reserve minutes, which will provide more color on the last meeting. In it, the bank decided to leave rates unchanged but left the door open for a cut in September.

EUR/USD technical analysis

The EUR/USD exchange rate has been in a strong uptrend in the past few weeks. As it rose, it formed an inverse head and shoulders (H&S) pattern, a popular bullish sign. It has moved above this pattern’s neckline at 1.0985.

The pair has remained above the 50-day moving average and the dots of the parabolic SAR. Also, the Average Directional Index (ADX) has pointed upwards and moved to 30, meaning that the uptrend has momentum.

The Awesome Oscillator indicator has remained above the zero line since July 8. Therefore, the pair will likely continue rising, with the next reference level to watch being at 1.1138, its highest point in December last year.

dailyforex