Fundamental Overview
The lack of catalysts recently kept the US Dollar supported across the board despite the slowdown in momentum. The market might now be looking forward to the first weeks of November when we will get the key economic data, the FOMC decision and the US elections.
There’s been also a good argument that the markets are already positioning for a Trump victory and that should translate in USD strength as it should appreciate on higher growth and less rate cuts expectations. Nevertheless, not all markets have been in sync with this view.
On the EUR side, the ECB last week cut interest rates by 25 bps as expected but didn’t offer anything new in terms of forward guidance as the central bank remains data dependent and it’s not pre-committing to a particular rate path.
The market is pricing an 86% chance of another 25 bps cut in December with 14% probabilities of a larger 50 bps cut. Further ahead, the market sees the ECB cutting four more times in 2025.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD extended the drop further into the 1.08 handle. The price is now near a key swing level at 1.0777. If the price gets there, we can expect the buyers to step in with a defined risk below the level to position for a rally into the 1.10 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.06 handle next.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair has been trading inside a falling channel. We are seeing a bit of a pullback this morning and if the price reaches the top of the channel, we can expect the sellers to lean on that trendline to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to start targeting the 1.10 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we got a quick selloff yesterday although it wasn’t triggered by any catalysts other than some pressure from rising Treasury yields. The market is currently erasing the drop and we might see the price getting back to the top of the channel.
For now, we have a range here between the 1.0810 support and the 1.0870 resistance. The sellers will want to see the price breaking lower to extend the drop into the 1.0777 level, while the buyers will look for a break higher to start targeting the 1.10 handle. The red lines define the average daily range for today.
Upcoming Catalysts
This week is pretty empty on the data front with market moving releases scheduled for the latter part of the week. On Thursday, we get the Flash Eurozone and US PMIs, and the US Jobless Claims figures.
