Fundamental analysis of EUR/USD

The EUR/USD pair continued on a bullish trajectory after two days of range-bound movement, reaching the maximum level since February 2022 at 1.12750 during today's Asian session. An important factor was the weakening of the US Dollar to a 15-month low last Friday. The downward movement was the result of growing speculation about the imminent end of the Fed tightening period and the decline in the US consumer price index, which reinforced these sentiments. US Treasury bond yields are falling. The general positive attitude to risk also contributed to the weakening of the US dollar, which contributed to the growth of EUR/USD. 

 The euro is strongly supported by expectations that the European Central Bank (ECB) will continue to raise rates after July. The minutes of the ECB's June meeting show the Governing Council's determination to maintain the current bullish cycle to combat persistent inflation, which is expected to remain above the 2% target. This factor contributes to easing fears of slowing economic growth and strengthens EUR/USD. 

 Markets are now awaiting the latest economic forecasts from the European Commission. Other signals may come from the US retail sales and industrial production data released earlier in the North American session. This data, as well as US bond yields and general risk sentiment, could put pressure on the US dollar and give EUR/USD additional direction. The current fundamental backdrop suggests an uptrend in spot prices.  Today, the Eurozone economic chart is relatively calm and there are no significant indicators that could affect the EUR/USD pair. However, investors will have to listen to ECB Executive Committee member Fabio Panetta for ideas on post-summer strategy. Investors should also keep an eye on further media commentary. 

 Earlier this week, ECB Directors Joachim Nagel and Bostian Vasle discussed ongoing inflation but have yet to commit to a possible policy change in September. On the other hand, the US economy is balancing out. The focus is on retail sales, industrial production and inventories in the US. The focus will be on retail sales, industrial production and inventories. Analysts expect US retail sales to rise 0.5% in June, up from 0.3% in May. This will not change the attitude towards the Fed's monetary policy, but a positive result will increase the chances of a soft landing.

Technical analysis and scenarios:

The EUR/USD pair is currently trading at 1.12700, showing a bullish trend and comfortably within the upper range of the Bollinger Bands, indicating that the upward momentum is maintained. The narrowing of the price range also indicates the possibility of a significant price movement.Technical indicators point to a bullish trend. The Stochastic oscillator shows a value of 92.4296, which is above the signal line at 83.9364, which is a bullish sign. MACD is at 0.005007, almost on the same line with the signal line at 0.005667, indicating market consolidation.

Main scenario (BUY)

Recommended entry level: 1.13000.

Take Profit: 1.13500.

Stop loss: 1.12750.

Alternative scenario (SELL)

Recommended entry level: 1.12230.

Take Profit: 1.11310.

Stop loss: 1.12500.