The pair will likely keep rising as bulls target the next key resistance level at 1.1300.
Bullish view
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Buy the EUR/USD pair and set a take-profit at 1.1320.
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Add a stop-loss at 1.1170.
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Timeline: 1-2 days.
Bearish view
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Set a sell-stop at 1.1180 and a take-profit at 1.1100.
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Add a stop-loss at 1.1250.
The EUR/USD pair bounced back as investors assessed the damage caused by the recent Russia sanctions and the impacts on the European and American economies. It is trading at 1.1233, which is about 1.12% above the lowest level on Monday.
Sanctions Fears Ease
The EUR/USD pair declined sharply on Monday morning as investors rushed to the safety of the US dollar. The decline happened after a flurry of activity during the weekend that sought to isolate Russia for its invasion of Ukraine.
The sanctions were broad and will have an impact in and outside Russia. For example, western countries changed Putins calculus by blocking some of the Bank of Russia reserves. In the past few years however, Russia has stored its reserves in countries like China that are out of control of western countries. The country has also invested heavily in gold.
The pairs key driver today will be the ongoing conflict in Europe. As a result, the important economic numbers that will come out from Europe and the US will not have a major impact on the pair.
In the morning session, Markit will publish the latest manufacturing PMI numbers from the Eurozone. These numbers are expected to show that the blocs PMIs did well in February as demand rose and as supply chain challenges remained under control.
For example, based on the first estimate, analysts expect the data to show that the PMI rose to 58.5. For the European Union, analysts expect the data to show that the PMI rose to 58.4 in February.
Markit and the Institute of Supply Management will also publish the latest PMI numbers. Analysts expect the data from the two organizations to show that the PMI rose to 58 and 58.3, respectively.
EUR/USD Forecast
The EUR/USD pair held steady in the evening session as the risk-on sentiment happened. It is trading at 1.1220, which is significantly higher than Mondays low of 1.1145. On the four-hour chart, the pair seems like it has formed an important support at about 1.1200.
It also remains slightly below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved slightly above the oversold level. Therefore, the pair will likely keep rising as bulls target the next key resistance level at 1.1300.
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