US
- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The recent US Core PCE came in line with expectations.
- The labour market is starting to show some weakness as Continuing Claims are now rising at a fast pace and the NFP data last Friday missed across the board.
- The US Consumer Confidence fell for the third consecutive month although the data beat expectations.
- The US ISM Manufacturing PMI last week missed expectations by a big margin, followed later on Friday with a disappointing ISM Services PMI, although the index remained in expansion.
- The market doesn’t expect the Fed to hike anymore.
EU
- The ECB left interest rates unchanged as expected as the central bank has ended its tightening cycle.
- President Lagarde highlighted the weakness in the Eurozone economy and reaffirmed that rates will make a substantial contribution to curbing inflation.
- The Eurozone CPI missed expectations on the headline figures but the Core measure remained unchanged. This won’t change the ECB’s stance anyway.
- The labour market remains very tight but the unemployment rate last week ticked higher.
- The recent Eurozone PMIs missed across the board as the economy continues to struggle.
- The market doesn’t expect the ECB to hike anymore.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the EURUSD pair got rejected from the resistance around the 1.0750 level where we had also the confluence with the 38.2% Fibonacci retracement level. The price pulled back from overstretched levels into the blue 8 moving average and bounced back as the buyers stepped in. The bias in the short-term remains skewed to the upside given the series of higher highs and higher lows and the moving averages pointing upwards.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price bounced on a strong support zone around the 1.0670 level where we had the previous swing high and the 38.2% Fibonacci retracement level for confluence. The buyers stepped in at the support with a defined risk below it to target the resistance and eventually aiming for a breakout. The sellers, on the other hand, will want to see the price breaking below the support to pile in and target the lows around the 1.05 support.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has made a new higher high recently and consolidated a bit around the previous swing high level. The buyers are likely to increase the bullish bets around this level with the red 21 moving average for confluence and keep targeting a break above the resistance. Downside breakouts, on the other hand, should see more sellers coming into the market.
Upcoming Events
Today we have the US Jobless Claims on the agenda while tomorrow it will be the time for the University of Michigan Consumer Sentiment report. The market is likely to focus on the US Jobless Claims given the recent weakness in the labour market data. Strong readings are likely to support the USD, while weak figures should keep on weighing on the greenback in the short-term.
