USD

  • The Fed left interest rates unchanged as expected while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
  • Fed Chair Powell stressed that they want to see more evidence of inflation falling back to target and that a rate cut in March is not their base case.
  • The latest US GDP beat expectations by a big margin.
  • The US PCE came mostly in line with expectations with the Core 3-month and 6-month annualised rates falling below the Fed’s 2% target.
  • The US NFP report beat expectations across the board by a big margin.
  • The ISM Manufacturing PMI surprised to the upside with the new orders index, which is considered a leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat expectations across the board with the employment sub-index erasing the prior drop and prices paid jumping above 60.
  • The US Consumer Confidence report came in line with expectations but the labour market details improved considerably.
  • The market now expects the first rate cut in May.

EUR

  • The ECB left interest rates unchanged as expected maintaining the usual data dependent language.
  • The recent Eurozone CPI came in line with expectations with the disinflationary process continuing steady.
  • The labour market remains historically tight with the unemployment rate hovering at record lows.
  • The Eurozone PMIs beat expectations on the Manufacturing side but missed on the Services one with both measures remaining in contraction.
  • The ECB members recently have been pushing back against the aggressive rate cuts expectations.
  • The market expects the ECB to cut rates in April.

EURUSD Technical Analysis – Daily Timeframe

EURUSD Technical Analysis
EURUSD Daily

On the daily chart, we can see that EURUSD bounced from the key support zone at the 1.0723 level and pulled back into the blue 8 moving average. The price was overstretched following the US NFP report as depicted by the distance from the 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move. We indeed got a pullback into the moving average which is where we should start to see some action on the lower timeframes.

EURUSD Technical Analysis – 4 hour Timeframe

EURUSD Technical Analysis
EURUSD 4 hour

On the 4 hour chart, we can see that the pair pulled back to retest the bottom trendline of the falling wedge pattern where we can also find the confluence of the 38.2% Fibonacci retracement level and the previous swing low level. This is where the sellers should step in with a defined risk above the resistance to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into the top trendline around the 1.0850 level.

EURUSD Technical Analysis – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

On the 1 hour chart, we can see that the price rejected the key resistance zone around the 1.0785 level and it’s now at the upward trendline where we have also the red 21 moving average for confluence. This is where the buyers are likely to step in with a defined risk below the trendline to position for a break above the resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows.

Upcoming Events

Today we will see the latest US Jobless Claims figures which is going to be last notable event of the week.