Fundamental Overview
Yesterday, the US Consumer Confidence report surprised to the downside with one of the largest drops since 2021. The labour market data in the report softened a lot and it generally leads the unemployment rate.
The market responded by raising the probabilities for the Fed to cut by 50 bps in November to roughly 60%. The question now is whether this is just about the low hiring rate or something worse. We will have to wait for the NFP report next Friday.
On the EUR side, the market started to price in a back-to-back cut in October from the ECB following the latest Eurozone PMIs where the data deteriorated more than expected. Moreover, ECB’s Muller opened the door for a rate cut in October saying that it cannot be totally excluded.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD rallied back to the 1.12 handle after a brief selloff following the Eurozone PMIs. From a risk management perspective, the buyers would have a much better risk to reward setup around the trendline, although a break of the high will likely see the bullish momentum increasing. The sellers, on the other hand, will likely step in around these levels to position for a drop into the trendline.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another minor trendline defining the current bullish momentum. If we were to get a pullback, the buyers will likely lean on the trendline to position for a rally into the 1.13 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the major trendline.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much we can add as buyers will look for a breakout to the upside to increase the bullish bets into new highs, while the sellers will look to step in around these levels to target a pullback into the trendline.. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow, we get the latest US Jobless Claims figures, while on Friday, we conclude the week with the US PCE.