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 Q1 GDP surprisingly missed expectations although the core components showed a strong economy, nonetheless. The Core PCE though surprised to the upside pushing rate cuts further away.
  • 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 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

EURUSD Technical Analysis
EURUSD Daily

On the daily chart, we can see that EURUSD broke through the key 1.07 resistance and it’s now getting rejected by the confluence of the 50% Fibonacci retracement level and the red 21 moving average. This is where the sellers are stepping in with a defined risk above the Fibonacci level 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 major trendline.

EURUSD Technical Analysis – 4 hour Timeframe

EURUSD Technical Analysis
EURUSD 4 hour

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. The price is struggling right at the upper bound of the flag as the sellers continue to pile in to position for a drop into new lows. A breakout to the upside would invalidate the bearish flag and give the buyers clear way to target the major trendline around the 1.08 handle.

EURUSD Technical Analysis – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

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 we can find the confluence of the previous resistance now turned support, the minor black trendline and the 4-hour 21 moving average. If we get a pullback into the trendline, we can expect the buyers to lean on it with a defined risk below the 1.0690 zone to position for a rally into new highs. 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 conclude the week with the US PCE report.