Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0700.
- Add a stop-loss at 1.0400.
- Timeline: 1-3 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0400.
- Add a stop-loss at 1.0700.
EUR/USD exchange rate rose after the latest European inflation and PMI numbers, which came a few days ahead of the European Central Bank (ECB) data. It rose to an intraday high of 1.0500, its highest swing since February 26.
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European inflation rises ahead of ECB decision
The EUR/USD pair rose after the US published better-than-expected consumer inflation and manufacturing PMI data. According to Eurostat, the headline Consumer Price Index (CPI) rose 2.6%, higher than the median estimate of 2.5%. It rose from minus 0.9% in January to 0.6% in February.
The headline consumer price index rose 2.4% in February, higher than the median estimate of 2.3%. It moved from minus 0.3% to 0.5%. These numbers mean that the European inflation remains steady this month.
Another report showed that the European manufacturing PMI rose from 46.6 in January to 47.6 in February, higher than the median estimate of 47.3. While the PMI remained below 50, it made progress in February.
These numbers came a day ahead of the upcoming European Central Bank (ECB) interest rate decision. While economists expect the central bank to cut interest rates by 0.25%, the strong data means that it may leave rates on hold.
The EUR/USD exchange rate reacted to the strong US manufacturing PMI data. According to S&P 5 Global, the manufacturing PMI rose from 51.2 in January to 52.7 in February. The ISM manufacturing PMI figure rose to 50.3, a sign that the sector is improving.
The EUR/USD pair also rose as the US dollar index tumbled by over 1% to $106.45. It dropped against most currencies, including the sterling and the Australian dollar.
EUR/USD technical analysis
The EUR/USD pair bottomed at 1.0173 earlier this year, and has bounced back to 1.0500. It has moved above the 50-day Exponential Moving Average (EMA) and the 23.6% Fibonacci Retracement point at 1.0420.
The pair moved above the Ichimoku Cloud indicator. It has moved above the ascending triangle pattern, a popular bullish continuation sign. The pair remains slightly below upper side of the triangle at 1.0520.
Therefore, the pair will likely continue rising as bulls target the 50% retracement level at 1.0700, up by almost 2% from the current level.
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