Fundamental Overview
The USD continues to remain under pressure amid positive risk sentiment and the imminent rate cuts from the Fed which should help global growth. These are generally bearish drivers for the greenback.
In fact, the appreciation of the EUR has been mostly driven by the US Dollar side of the equation. The ECB is expected to cut in September as well and then deliver at least another cut by the end of the year.
The focus will be on tomorrow’s Flash PMIs and then Fed Chair Powell speech at the Jackson Hole Symposium on Friday.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD extended the rally all the way to the 1.1136 level. This is where we can expect the sellers to step in with a defined risk above the level to position for a drop back into the 1.10 handle. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 1.1278 level next.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a good support zone around the 1.1050 level where we can find the confluence of the previous swing high level, the trendline and the 50% Fibonacci retracement level.
If we get a pullback from these levels, we can expect the buyers to lean on the trendline to position for a break above the 1.1136 level with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor upward trendline defining the current bullish momentum. The buyers will likely keep on leaning on it to position for new highs, while the sellers will want to see a break below it to increase the bearish bets into the 1.1050 support. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we get the Eurozone PMIs, the US Jobless Claims and US PMIs. On Friday we conclude the week with Fed Chair Powell speaking at the Jackson Hole Symposium.