Fundamental Overview
The US Dollar yesterday weakened across the board despite a higher than expected US Core PPI and Fed Chair Powell acknowledging the need to proceed more carefully with rate cuts from here on.
This might be a signal that the market could be fine with just two rate cuts priced in for 2025 and will need some stronger reasons to price out those as well. This could trigger a bigger pullback in the US Dollar after the incredible run since the beginning of October.
On the EUR side, not much has changed with the market continuing to price in a 31% chance of a 50 bps cut in December and a total of 148 bps of easing by the end of 2025. This could turn out to be too much if the data picks up.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD bounced from the key support zone around the 1.05 handle. That’s where the buyers stepped in with a defined risk below the level to position for a rally back into the 1.08 handle. 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 – 4 hour Timeframe
On the 4 hour chart, we can see that we have a downward trendline defining the current bearish momentum. We can expect the sellers to lean on it to position for the break below the 1.05 handle, while the buyers will look for a break higher to increase the bullish bets into the 1.08 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor resistance zone around the 1.0590 level where we have the trendline for confluence. This is where the sellers are likely to step in with a defined risk above the resistance to position for the break below the 1.05 handle.
The buyers, on the other hand, will look for a break higher to increase the bullish bets into the 1.08 handle. The red lines define the average daily range for today.
Upcoming Catalysts
Today, we conclude the week with the US Retail Sales data.