Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1550.
Add a stop-loss at 1.1750.
Timeline: 1-2 days.
Bullish view
Set a buy-stop at 1.1710 and a take-profit at 1.1800.
Add a stop-loss at 1.1550.
The EUR/USD exchange rate pulled back from its lowest levels last week as the US dollar made a cautious comeback. It was trading at 1.1662, a few points below this week’s high of 1.1710. Focus now shifts to the upcoming US consumer confidence, housing and inflation data, and Kevin Warsh’s upcoming statement at the Jackson Hole Symposium.
US Inflation, Consumer Confidence, and Kevin Warsh Statement
The EUR/USD pair pulled back as the recent rally lost steam. Focus will now be on the important macro numbers from the United States. The Conference Board will publish the latest consumer confidence report, which showed that it dropped to 90.3 in August from the previous 90.8.
Consumer confidence has been in a downward trend because of the elevated inflation and a worsening labor market. A recent report showed that the economy shed 23,000 jobs in July, with the participation rate pulled back.
Top Regulated Brokers
The US will publish the latest new home sales data, which are expected to drop from 628k in June to 620k in July. After this, the US will release the latest personal consumption expenditure (PCE) and GDP numbers. Economists expect the report to show that the core PCE rose 3.3% in July, higher than the Federal Reserve target of 2.0%.
The US will release the latest US GDP report, which will shed more color on its performance in the second quarter. Economists expect the report to show that the economy grew by 1.5% in the second quarter, helped by the artificial intelligence boom.
The most important catalyst this week will be the upcoming Jackson Hole Symposium, where officials will talk on the economy and provide guidance on what to expect. Markets are not sure what the Fed will do this year, with odds of a hike moving to 55% on Polymarket.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has dropped from last week’s high of 1.1710 to the current 1.1660. It remains above the crucial support level of 1.1620, its highest point on July 16.
The pair has formed two shooting star patterns, which often lead to bearish reversals. Also, the Relative Strength Index (RSI) has moved from the overbought of 73 last week to the current 68.
Therefore, the pair will likely drop further and retest the key support level of 1.1620. A drop below that level will point to more downside, potentially to the psychological level of 1.1500. A move above the resistance level of 1.1710 will invalidate the bearish outlook and point to more upside.
Ready to trade our free Forex signals? Here are the top brokers in Europe to choose from.