Fundamental Overview
The USD continues to be backed by good economic data as we have also seen recently from the US PMIs last Friday and the US Consumer Confidence report this week. Yesterday, we also got the US Jobless Claims figures where the data showed that the labour market continues to rebalance via less job availability rather than more layoffs.
Such data keeps the interest rates expectations stable around two cuts by the end of the year and supports the risk sentiment amid a pickup in growth without inflationary pressures.
The EUR, on the other hand, has been under pressure due to some US Dollar strength this week. It looks like the price action has been influenced more by month-end, quarter-end and mid year-end flows rather than something fundamental.
The market participants should also consider that this weekend we have the first round of the French elections on the agenda which could lead to a gap on Monday. Therefore, it shouldn’t be surprising to see some defensive EUR positioning into the weekend if it happens.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD has been consolidating just beneath the key 1.0727 level. As the price stays below the level, it skews the bias more to the downside as the sellers continue to pile in for a drop into the 1.06 handle. The buyers will want to see the price rallying back above the 1.0727 level to regain some control and start targeting new highs.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong support around the 1.0680 level where the price got rejected from several times in the past days. We can also see that the price has been printing lower highs as the market kept testing the support. This is a bearish price action and it also formed what looks like a descending triangle.
A breakout to the downside should see the bearish momentum increasing with the sellers piling in for a drop into the 1.06 handle. The buyers, on the other hand, 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 that we have an interesting zone around the 1.07 handle as the price reacted to it several times. This is acting as kind of a barometer for the sentiment with the price staying above being more bullish and below being more bearish. There’s not much else we can glean from this chart as the buyers will keep on stepping in around support zones and the sellers will lean on the resistances. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US PCE report where the market expects the Core PCE to fall further towards the Fed’s 2% target.
