Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1600.
- Add a stop-loss at 1.1400.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1400.
- Add a stop-loss at 1.1600.
The EUR/USD exchange rate surged to the highest point since 2021 as the greenback tumble continued. It has jumped in the last five consecutive weeks, its longest streak since March 2023. It is up by almost 13% from its lowest level this year.
Donald Trump’s theat to fire Governor Jerome Powell
The EUR/USD pair has done well in the past few months as concerns about Donald Trump’s threat to fire Jerome Powell. He has continued to criticize Powell and the Federal Reserve for not cutting interest rates.
Some government officials have hinted that Trump was studying whether it was possible to fire the Fed Chair. Such a move would lead to concern about the role of the US dollar as a safe haven.
That role has been questioned after Trump announced sweeping tariffs on all countries earlier this month. He has implemented a 25% tariff on all imported vehicles, steel, and aluminum.
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Trump also placed a 10% tariff on European goods to the United States. Tariffs on Chinese goods have jumped to 145%, the highest level in decades.
The EUR/USD pair has also jumped as Europe has become a safe haven during the turmoil, with its stocks doing better than the Nasdaq 100 and the S&P 500.
Looking ahead, the key catalysts for the pair on Tuesday will be statements from several Fed officials like Neel Kashkari, Patrick Harker, and Phlip Jefferson. These officials will share their thoughts about the current state of the market and what to expect later this year.
The other top European and US economic numbers will come out on Wednesday when S&P Global will publish the flash manufacturing and services PMI numbers.
EUR/USD technical analysis
The daily chart shows that the EUR/USD exchange rate has been in a strong bullish momentum in the past few months. It has soared from a low of 1.0180 in January to a high of 1.1572.
The pair recently crossed the important resistance level at 1.1212, the upper side of the cup and handle pattern. Moving above that level validated this pattern, which is one of the most bullish ones in technical analysis.
The Relative Strength Index (RSI) and other oscillators like the MACD and the Awesome oscillator have all pointed upwards. Therefore, the pair will likely continue rising as buyers target the psychological level at 1.1600. The alternative scenario is where it drops and retests the cup’s upper side and then resumes the uptrend.
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