Following yesterday’s steep drop, the EURUSD currency pair now has a strong chance of retracing back to the previously broken support level at 1.1660. This potential pullback makes sense from a technical standpoint, as this move would help fill the gap left behind. We’ve already seen a similar pattern unfold in other major pairs, including AUDUSD, USDCAD, and XAUUSD.
The EURUSD sell-off was likely driven by yesterday’s US CPI figures, which revealed a slight surge in inflationary pressures. This reinforces the case for the Fed to maintain restrictive monetary policy for longer.
That said, the price could easily bounce back to 1.1660, as these momentum-driven moves usually don’t hold, and the market tends to return to where it was trading before the news hit.
Today, the next round of US inflation data will be released—June’s producer price index (PPI). If the reading comes in flat or softer, it could accelerate EURUSD’s retreat toward the broken support level. Forty-five minutes after the PPI release, US industrial production figures for June will drop. Weak numbers, especially if they miss forecasts, could add further pressure on the dollar, giving EURUSD another boost.
The overall recommendation is to buy EURUSD.
Profits should be taken at the level of 1.1660. A Stop loss could be set at the level of 1.1560.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
