Bullish view
Bearish view
The EUR/USD exchange rate has rallied to the highest level in months as traders focused on the bond market and last week’s Federal Reserve minutes. It was trading at 1.1676 as focus now shifts to key macro numbers from the US and the European Union.
US and European Macro Data Ahead
The EUR/USD made a strong bullish breakout last week as the bond market remained under intense pressure. In the United States, the 30-year yield jumped to a nearly two-decade high of 5.336%, continuing an uptrend that started during the pandemic.
In the aftermath, Scott Bessent, the Treasury Secretary, decided to intervene by announcing a large buyback program. While this intervention had an immediate impact, with the yield falling to 5.18%, it then rebounded and is nearing the year-to-date high of 5.33%. This rebound may continue in the foreseeable future because of the rising US public debt, which crossed the $40 trillion mark last week.
The soaring bond yields also happened in Europe, where most countries have continued to boost their spending this year. For example, in Germany, a country that was known for its frugality, the yield climbed to 3.77%, its highest level in years. In France, it jumped to 4.92%, while in Italy, it moved to 4.88%.
The EUR/USD pair will react to the new developments in the bond market and the upcoming macro data from the US and Europe. In the US, the Conference Board will release the latest consumer confidence report on Tuesday, with economists expecting the data to come in at 90.3.
The US will also publish the latest house price index and home sales data on Tuesday. The most important report will be the upcoming personal consumption expenditure (PCE) report, which is the Fed’s favorite inflation gauge. Also, in Europe, some countries like France and Italy will publish the flash inflation numbers.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair made a strong bullish breakout last week. It emerged from a consolidation phase where it remained in the past few weeks.
The pair has jumped above the crucial resistance level of 1.1613, its highest level on June 15 this year. It has already moved above the 50-day Exponential Moving Average (EMA), while the Relative Strength Index (RSI) has jumped to the overbought level of 72.
The pair is slowly forming a bullish flag pattern, a common bullish continuation sign. If this happens, the next level to watch will be the psychological level of 1.1800. A drop below the support of 1.1613 will invalidate the bullish outlook.
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Crispus Nyaga is a Technical Analyst at DailyForex with more than eight years of experience as a financial analyst, coach, and trader. He specializes in technical analysis of major currency pairs and cryptocurrencies, using chart patterns, trend structure, and key indicators to frame trading scenarios for Forex and digital asset markets. Crispus has worked with well-known brokers including ATFX, easyMarkets, and OctaFX, and his market commentary has been published widely on platforms such as Seeking Alpha, InvestingCube, Capital.com, and Invezz.
As seen on: SeekingAlpha, Macrostreet.com, Invezz.com, Forbes, Investing.com, Marketwatch, Crypto.news
