EUR/USD Forex Forecast 08/03: Hammer Candle Points

(MENAFN- Daily Forex) The EUR/USD exchange rate suffered its biggest drop since July last year as investors moved to the safety of the US dollar. It ended the week at 1.1615, down from the year-to-date high of 1.2088.

EURUSD Chart by TradingViewIran War and US Consumer Inflation Report Data

The EUR/USD pair retreated as investors moved to safe havens with the start of the war in Iran. The dollar largely jumped against other currencies but pared some of its gains after the Bureau of Labor Statistics (BLS) released the February jobs report.

This report revealed that the economy lost 92,000 jobs in February, the worst performance in years. The unemployment rate also ticked upwards to 4.4%.

Looking ahead, the pair will react to the new developments in Iran, where the war has continued, pushing European natural gas prices to the highest level in years. These soaring gas prices will lead to more inflation in the region and affect the economic growth.

Signs that the war is continuing will be bearish for the EUR/USD pair as investors move to safe havens.

The pair will also react to the upcoming US inflation report, which comes out on Wednesday this week. Economists polled by Reuters expect the upcoming report to show that the headline Consumer Price Index (CPI) rose from 2.4% in January to 2.5% in February. Core inflation is expected to remain unchanged at 2.5%.

These numbers mean that the Federal Reserve will be in a bind. Cutting interest rates to boost the economy will likely lead to a higher inflation rate, while hiking rates will affect the economic growth.

The other key catalysts for the EUR/USD pair will be the personal consumption expenditure (PCE) report on Friday and housing starts on Friday/USD Technical Analysis

The weekly timeframe chart shows that the EUR/USD pair has pulled back in the past few weeks, moving from a high of 1.2088 in January to the current 1.1615. It has moved below the Ultimate Support level of the Murrey Math Lines tool at 1.1788.

The pair remains above the 50-week Exponential Moving Average (EMA). It has also formed a hammer candlestick pattern, a common bullish reversal sign.

The pair has also formed a bullish flag pattern, which is made up of a vertical line and a channel. Therefore, the pair will likely bounce back and possibly retest the key resistance level at 1.1800. A move below the lower side of the channel will invalidate the bullish outlook.

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