*Interest Rate Differentials:* The Federal Reserve has maintained a hawkish stance, while the European Central Bank (ECB) has adopted a more cautious approach, keeping rates lower for longer. This has supported the USD against the EUR.
– *Economic Data:* Recent US economic data, including strong employment figures and higher-than-expected inflation, have bolstered the USD. In contrast, Eurozone growth remains sluggish, with inflation below target.
– *Geopolitical Risks:* Ongoing geopolitical tensions in Europe, particularly energy supply concerns, continue to weigh on the EUR.
Bullish Breakout*
– *Entry Point:* Buy above 1.0950 (confirmed breakout with a 4-hour close).
– *Take Profit Levels:*
– TP1: 1.1000 (psychological level).
– TP2: 1.1250 (2024 high).
– *Stop Loss:* 1.0850 (below the breakout level).
– *Risk-Reward Ratio:* 1:2.
Scenario 2: Bearish Breakdown*
– *Entry Point:* Sell below 1.0700 (confirmed breakdown with a 4-hour close).
– *Take Profit Levels:*
– TP1: 1.0600 (weekly support).
– TP2: 1.0350 (2023 low).
– *Stop Loss:* 1.0800 (above the breakdown level).
– *Risk-Reward Ratio:* 1:2.5.
Daily Chart (Short-Term Perspective):*
– *Trend:* The daily chart shows a neutral to slightly bullish bias, with the pair trading above the 50-day MA but below the 200-day MA.
– *Key Levels:*
– *Support:* 1.0700 (recent swing low) and 1.0600 (weekly support).
– *Resistance:* 1.0900 (recent swing high) and 1.0950 (weekly resistance).
– *Breakout Point:* A break above 1.0950 could trigger bullish momentum, while a break below 1.0700 could lead to further downside.
Conclusion*
The EUR/USD pair is at a critical juncture, with key support and resistance levels defining the next major move. Traders should remain vigilant for breakout opportunities while managing risk effectively. The current setup favors a cautious approach, with a bias toward a bearish breakdown given the broader macroeconomic backdrop.