[ad_1]
The pair will likely keep rising as bulls target the key resistance level at 1.0900.
Bullish View
- Buy the EUR/USD pair and set a take-profit at 1.0900.
- Add a stop-loss at 1.0645.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 1.0745 and a take-profit at 1.0645.
- Add a stop-loss at 1.0825.
The EUR/USD upward momentum continued as investors continued to brace for higher interest rates by the European Central Bank (ECB). The pair also jumped after the relatively strong inflation numbers from some European countries.
ECB Tightening Priced In
The EUR/USD pair rose as investors continued to anticipate potential rate hikes by the ECB. In a blog post last week, Christine Lagarde noted that the bank will likely start hiking interest rates in July and then exit negative rates in September. Her views were shared by several bank officials such as those from Germany and Netherlands.
The sentiment was shared on Monday by Philip Lane, the bank’s chief economist. In a statement to the Cincos Dias, he said that the bank will likely start tightening by adding rates by 0.25%. In saying so, he differed with the Dutch central bank governor who recommended that the bank should hike by 0.50%. The bank’s deposit facility rate is currently at minus 0.50%.
His statement came as the German statistics office published the latest consumer inflation data. According to Destatis, the country’s consumer price index jumped to a record high of 8.3% in May as the cost of living rose. This trend was mostly driven by the cost of food and energy prices.
The same trend happened in Spain, where the headline CPI rose to 8.7%, which was the highest level on record. The harmonized inflation rate in France and Germany also surged to a record high.
The next key data to watch on Tuesday will be the preliminary euro area inflation data. Economists expect the data to show that the headline CPI rose from 7.4% in April to 7.7% in May this year. Excluding the volatile food and energy prices, the CPI is expected to have risen by 3.6%.
EUR/USD Forecast
The EUR/USD pair continued its bullish trend after it formed a break and retest pattern last week. It did that by retesting the important support level at 1.0645, which was the highest level on May 5th. It was also along the neckline of the inverted head and shoulders pattern.
The pair’s uptrend is being supported by the 25-day and 50-day moving averages while the Relative Strength Index has continued rising. Therefore, the pair will likely keep rising as bulls target the key resistance level at 1.0900.
[ad_2]