EUR/USD Trading Signals
Trade recommendations for the EUR/USD pair include buying with a take-profit set at 1.0500 and a stop-loss at 1.0225. The expected timeline for this trade is 1-2 days. On the other hand, a bearish view suggests setting a sell-stop at 1.0375, with a take-profit at 1.0300 and a stop-loss at 1.0500.
The recent rebound in the EUR/USD exchange rate can be attributed to the cooling of the US dollar index surge. After hitting a low of 1.0223 on January 2, the pair bounced back to 1.0436. The rebound was supported by a weakening US dollar as American bond yields continued to rise.
US Dollar Outlook
The US dollar softened as bond yields increased, while stock markets surged due to the January Effect. Despite rising bond yields, the dollar index slipped by over 60 basis points to $108.15. This decline was also due to a more hawkish tone expressed by a senior Fed official, Lisa Cook.
The euro strengthened following mixed economic data in Europe, hinting at a potentially more hawkish stance by the European Central Bank (ECB) than previously anticipated. This was supported by improved economic indicators, such as rising Consumer Price Index (CPI) and PMI numbers for the Eurozone.
Technical Analysis
From a technical perspective, the EUR/USD pair has formed a bullish reversal pattern known as a falling wedge. Despite remaining below the 50-day and 25-day Exponential Moving Averages (EMA), the pair is expected to experience a bullish breakout towards the key resistance levels at 1.0500 and potentially 1.0600.
The Relative Strength Index (RSI) has also formed a symmetrical triangle pattern below the zero line, indicating a potential upward movement for the pair. Traders are advised to monitor key technical levels and market developments for informed trading decisions.
Source : www.dailyforex.com