Fundamental Overview
The USD got a boost last week from the strong US PMIs which lifted Treasury yields and put in question the rate cut in September. Once the market digested the report and saw that there was more good news on the growth side than bad news on inflation, the USD strength faded fast.
The EUR, on the other hand, continues to benefit from the USD weakness and the pickup in the Eurozone PMIs. The market scaled back a bit the rate cuts expectations last week following the strong Eurozone data.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD bounced around the 1.08 handle, and it looks like the buyers have enough momentum to push the price back into the 1.09 handle. The recent price action formed what looks like a bullish flag pattern, so a break above the 1.09 resistance should give the buyers even more conviction to target the 1.10 handle.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we’ve been consolidating between the 1.0860 level and the 1.0812 support. The buyers will want to see the price breaking above the 1.0860 level and the downward trendline to confirm the bullish flag and pile in for a break above the 1.09 resistance.
The sellers, on the other hand, will want to see the price breaking below the 1.0812 support to confirm a reversal and start targeting a drop into the 1.0727 level.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a strong resistance at the 1.0860 level where we can find the confluence of the downward trendline and the recent swing high. The sellers might step in around these levels with a defined risk above the 1.0860 level to position for a drop back into the 1.0812 support. The red lines define the average daily range for today which shows how much the pair is likely to move up and down.
Upcoming Catalysts
Tomorrow we get the US Consumer Confidence report where the focus will likely be on the labour market details. On Thursday, we will see the Eurozone Unemployment Rate and the latest US Jobless Claims figures. Finally on Friday, we conclude the week with the Eurozone Flash CPI and the US PCE reports.
