Fundamental Overview
The USD last week saw a quick dip across the board following the soft US CPI report as the market priced back in two rate cuts by the end of the year. The moves were reversed soon after though as we got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed expected just one cut for this year despite the soft US CPI report.
Later on, Fed Chair Powell backpedalled on the projections making them a bit less worrying as the central bank remains very data dependent. The US Dollar eventually got supported in the last part of the last week as the risk sentiment turned more cautious.
The EUR, on the other hand, got hit hard by the European elections as the political uncertainty weighed on the sentiment and led to some increase in bonds risk premia and selloff in European stocks.
The risk sentiment has been gradually improving this week although we are not out of the woods yet. The Flash PMIs on Friday will likely be important catalysts in this regard.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD has been pulling back this week after breaking through the key 1.0727 support zone. This is coming amid general US Dollar weakness as the risk sentiment has been gradually improving. The buyers are gaining a bit more confidence as the price rallied back above the 1.0727 level.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a good resistance around the 1.0760 level where we can find the confluence of the trendline and the 50% Fibonacci retracement.
This is where we can expect the sellers to step in with a defined risk above the trendline to position for a drop into the 1.06 handle with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 1.09 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has been printing higher highs and higher lows on this timeframe as the bullish momentum started to pick up amid improving sentiment. The sellers will want to see the price falling below the swing low at 1.0710 to regain control and increase the bearish bets into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the US Housing Starts, Building Permits and the latest US Jobless Claims figures. On Friday, we conclude the week with the Eurozone and US PMIs.
