USD
- The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
- The US CPI beat expectations for the third consecutive month, while the US PPI came in line with forecasts.
- The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
- The US PMIs missed expectations in April with the commentary citing lower inflationary pressures but also increased layoffs.
- The US Retail Sales beat expectations across the board by a big margin with positive revisions to the prior figures.
- The market expects the first rate cut in September.
EUR
- The ECB left interest rates unchanged as expected and opened the door for a rate cut in June.
- The recent Eurozone CPI missed expectations.
- The labour market remains historically tight with the unemployment rate hovering at record lows.
- The latest Eurozone PMIs beat expectations on the Services side while the Manufacturing one missed dropping further in contraction.
- The market expects the ECB to cut rates in June.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD eventually pulled back to retest the 1.07 resistance zone where we can find the confluence of the 38.2% Fibonacci retracement level and the red 21 moving average. This is where we can expect the sellers to 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 increase the bullish bets into the trendline around the 1.08 handle.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the recent price action might have formed a bearish flag, although the price will need to break below the bottom trendline to confirm it. This should strengthen the resistance zone as we have also the top trendline adding extra confluence. The sellers will look for a drop into the bottom trendline targeting a break below it, while the buyers will want to see a breakout to the upside to invalidate the bearish setup and position for a rally into the 1.08 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action and we can notice that we have another important zone around the 1.0690 level where the price found both a resistance on the way up and a support on the way down. Moreover, there’s also the red 21 moving average acting as dynamic support. This is where the buyers might want to step in with a defined risk below the level to position for a breakout and a rally into the 1.08 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the bottom trendline around the 1.0640 level.
Upcoming Events
Tomorrow we will see the latest US Jobless Claims figures, while on Friday we conclude the week with the US PCE report.
