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 CPI beat expectations for the second consecutive month with the disinflationary trend reversing.
  • 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 June.

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 placing more weight on wage growth and data dependency.
  • 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 dropped back into the key support around the 1.07 handle following the hot US CPI report. The price bounced as the buyers stepped in again to position for a rally into the trendline targeting a break above it. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.05 handle next.

EURUSD Technical Analysis – 4 hour Timeframe

EURUSD Technical Analysis
EURUSD 4 hour

On the 4 hour chart, we can see that the latest leg lower diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might signal a correction all the way back to the trendline where we have the confluence with the 1.08 handle. That’s where the sellers will likely step in more aggressively with a defined risk above the trendline to position for a breakout below the 1.07 support.

EURUSD Technical Analysis – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

On the 1 hour chart, we can see that the price has been consolidating inside the 1.0723 and 1.0736 range. Today we have some key economic releases and a break on either side supported by the data should trigger a more sustained move in the direction of the breakout, so watch out for that.

Upcoming Events

Today we will see the latest US Jobless Claims figures and the US Retail Sales data, while tomorrow we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.