EUR/USD Forex Signal: Ripe for Bullish Breakout to 1.035 – 02 August 2022
The pair will likely continue rising as bulls target the key resistance level to watch will be at R2 at 1.035.
Buy the EUR/USD pair and set a take-profit at 1.0350.Add a stop-loss at 1.0225.Timeline: 1-2 days.
Set a sell-stop at 1.0250 and a take-profit at 1.0200.Add a stop-loss at 1.0320.
The EUR/USD pair held steady as the market reflected on the significantly weak data from Europe and the US dollar sell-off. It rose to a high of 1.0275, which was the highest level since Junly 5th of this year. The pair has risen by about 3.5% from its lowest level in June.
Weak European Data
The European economy has come under intense pressure in the past few months as the crisis in Ukraine continued. Data published on Monday showed that retail sales in Germany fell at the slowest pace since records started in 1994. They declined by 8.8% in June compared with the same month last year. Sales fell by 1.6% on a month-on-month.
Further data showd that manufacturing PMI in most European countries declined sharply in July. For example, in Italy, the PMI declined below 50. The European manufacturing PMI dropped to 49.8 in July as companies continued facing significant challenges.
The situation will likely continue getting worse as Europe’s gas prices continued rising. Gas prices continued rising as Russia continued squeezing the region. On Sunday, the country stopped supplying natural gas to Latvia.
Europe is now counting on LNG shipments from countries like Australia, US, and Qatar. However, there is a likelihood that supplies from Australia will start falling as the country boosts domestic consumption. Some parts of the country are expected to go through shortages if the ongoing foreign sales continue.
The pair also rose as Italian government bonds rallied as fears of another debt crisis faded. The yield on Italy’s 10-year debt declined below 3% for the first time since May this year. At the same time, the spread between the yields of the Italian and German bond yields narrowd to 2.2%.
The EUR/USD pair continued rising as the US dollar continued falling. Analysts expect that the Federal Reserve will slow its rate hikes considering that the economy is slowing dramatically. Data publshed last week showed that the country sank to a recession in Q2.
The four-hour chart shows that the EUR/USD pair rose to a high of 1.0276. This was a notable level since the pair struggled moving above this point several times in July. It is approaching the first resistance level of standard pivot points at 1.029.
It has moved above the 25-day and 50-day moving averages. The pair has formed an inverted head and shoulders pattern. Therefore, the pair will likely continue rising as bulls target the key resistance level to watch will be at R2 at 1.035.
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