Fundamental Overview
The USD rallied across the board last Friday following the hot US NFP report. The market priced out all the aggressive rate cuts expectations and it’s now finally in line with the Fed’s projections.
The focus remains on the economic data. The next key event to watch will be the US CPI report tomorrow. We will likely need a hot report to see some more downside, while a big miss could see the market price back in a more aggressive path for rate cuts.
On the EUR side, the market has fully priced in a back-to-back 25 bps cut in October from the ECB following the weak data and dovish comments from ECB officials.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD sold off heavily from the 1.12 resistance and we got even a break below the major trendline. This is where we can expect the sellers to pile in to position for more downside, while the buyers will want to see the price bouncing back up to start targeting the 1.12 handle again.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been consolidating ever since the drop triggered by the strong US NFP report last Friday. The market is waiting for the US CPI release tomorrow to decide where to go next. A break to the downside should see the sellers increasing the bearish bets, while a break to the upside will give the buyers a bit more confidence to position for new highs.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor downward trendline defining the current bearish momentum. The sellers will likely keep on leaning on it to position for further downside, while the buyers will want to see the price breaking higher to target a pullback into the 1.10 handle. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the FOMC Meeting Minutes. Tomorrow, we get the US CPI report and the US Jobless Claims figures. On Friday, we conclude with the US PPI and the University of Michigan Consumer Sentiment report.
