Fundamental Overview
Yesterday, the US PPI report missed expectations by a big margin triggering a selloff in the US Dollar as the market started to position into a potentially soft US CPI release today.
For the Fed, the market is split between a 25 and 50 bps cut in September and a total of 107 bps of easing by year-end. On the ECB side, the market is expecting a 25 bps cut in September and a total of 70 bps of easing by year-end.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD is breaking above the 1.10 handle as the soft US PPI yesterday prompted the market to position for a soft CPI today. The natural target for the buyers should be the 1.1136 high as there’s no notable resistance until then. The sellers, on the other hand, will want to see the price falling back below the 1.10 handle to position for a drop into the 1.09 handle.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently pulled back into the 1.09 handle where we had the 50% Fibonacci retracement level for confluence and bounced as the buyers piled in with a defined risk below the level to position for new highs. If the sellers take back control with a drop below the 1.10 handle, the 1.09 support will be a key zone to break to extend the fall into the 1.0812 level next.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price yesterday broke above the resistance zone around the 1.0940 level following the soft US PPI report and extended the rally as the bullish momentum picked up. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US CPI report. Tomorrow, we get the US Retail Sales and Jobless Claims figures. Finally, on Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
