USD
- 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 CPI missed expectations across the board bringing the expectations for rate cuts forward.
- The labour market is starting to show weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board.
- The US Consumer Confidence and University of Michigan Consumer Sentiment continue to fall.
- The latest US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
- The recent US Retail Sales beat expectations, while the US PPI missed forecasts by a big margin.
- The recent Fedspeak has been leaning on the hawkish side, but last week’s inflation report pretty much confirmed that the Fed might be done for the cycle.
- The market doesn’t expect the Fed to hike anymore.
EUR
- 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 recent Eurozone CPI missed expectations on the headline figures but the Core measure remained unchanged. This is unlikely to change the ECB’s stance anyway.
- The labour market remains historically tight but the unemployment rate recently 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 EURUSD reached the key swing level at 1.0950 after an incredible rally following the miss in the US CPI report. The price is now a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the latest leg higher into the key swing level diverged with the MACD. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the sellers are likely to step in with a defined risk to target a drop into the trendline.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the pair is trading inside a rising channel and we can expect some aggressive buyers leaning on the lower bound of the channel to keep charging higher. From a risk management perspective though, the buyers will have a much better risk to reward setup around the 1.0830 level where they will have the confluence with the daily blue 8 moving average and the trendline. If the price breaks the lower bound of the channel, we can expect the sellers to pile in and target the 1.0830 support.
Upcoming Events
This week is pretty empty on the data front with the US on holiday for Thanksgiving Day in the final part of the week. Today, we have the FOMC Meeting Minutes but it's unlikely to be market moving given that it's three-weeks old data. Tomorrow, we have the US Jobless Claims report which is probably going to be the most important release of the week. On Thursday, we have the Eurozone PMIs while on Friday we conclude the week with the latest US PMIs.
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