Fundamental Overview
The USD weakened across the board last Friday following the soft US NFP report. The data showed some more labour market cooling with an increase in the unemployment rate and a decrease in wage growth. We basically have an economy that is slowing but still growing. The market seems to be taking it as good news as it still expects a soft landing.
The EUR, on the other hand, gained last week against the US Dollar mainly because of the risk-on sentiment as the US data continued to support at least two rate cuts from the Fed but didn’t send recessionary signals. On the monetary policy front, the ECB members continue to repeat that they will wait for the data throughout summer before deciding on a rate cut in September.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD eventually extended the rally above the 1.08 handle and it’s now targeting the resistance around the 1.0885 level. That’s where we can expect the sellers to step in to position for a drop back into the 1.0812 support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 1.10 handle next.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the buyers will have a better risk to reward setup around the 1.0812 support where we can also find the trendline for confluence. The sellers, on the other hand, will want to see the price breaking lower to turn the bias more bearish and position for a drop into the 1.0727 level next.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the recent price action with the bounce on the 1.0812 level and the continuation of the uptrend. Today we get the US CPI and the US Jobless Claims figures, so we might see a spike either into the 1.0885 resistance or the trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today is the most important day of the week as we get the US CPI and the US Jobless Claims figures. Tomorrow, we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.