Fundamental Overview
Last week, despite the higher-than-expected inflation figures and a less dovish Powell, the US Dollar couldn’t extend the gains. The market’s pricing remained largely unchanged at three rate cuts by the end of 2025.
This might be a signal that the market is now fine with the current pricing, and we will need stronger reasons to price out the remaining rate cuts. This could open the door for some pullbacks and general US Dollar weakness.
On the EUR side, not much has changed although the probabilities for a 50 bps cut in December fell to 24% from 31% last week and a total of 139 bps of easing by the end of 2025. This could turn out to be too much if the data picks up with the Eurozone Flash PMIs on Friday in focus.
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 major trendline.
The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows or wait for the price to reach the trendline to push into new lows with an even better risk to reward setup.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently broke above the downward trendline that was defining the bearish momentum on this timeframe. This might be a signal for a bigger pullback. The buyers will want to see the price breaking above the 1.0682 level to increase the bullish bets into the trendline, while the sellers will likely lean on it to target the break below the 1.05 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor resistance zone around the 1.06 handle. This is where the sellers keep on stepping in to target the break below the 1.05 handle. The buyers, on the other hand, will need the price to break higher to start targeting new highs. The red lines define the average daily range for today.
Upcoming Catalysts
This week is pretty empty on the data front with the most important releases scheduled for the latter part of the week. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the Eurozone and US Flash PMIs.
