USD
- The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
- Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
- The US CPI and the US PPI beat expectations for the second consecutive month.
- The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
- The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
- There’s now basically a 50/50 chance of a rate cut in June.
EUR
- The ECB left interest rates unchanged as expected at the last meeting revising inflation and growth expectations downwards and maintaining the usual data dependent language.
- The recent Eurozone CPI missed expectations.
- The labour market remains historically tight with the unemployment rate hovering at record lows.
- The latest Eurozone PMIs beat expectations on the Services side while the Manufacturing one missed dropping further in contraction.
- The market expects the ECB to cut rates in June.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD got rejected recently by the trendline where we can also find the confluence of the 61.8% Fibonacci retracement level and the red 21 moving average. This is a very strong resistance zone that the buyers will need to break to increase the bullish bets into the 1.10 handle. The sellers, on the other hand, should pile in around these levels to position for a drop into new lows target a break below the key 1.0723 level.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the resistance zone around the 1.0870 level and we can also notice that the latest leg higher diverged with the MACD. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be another bearish signal, although the price will need to break below the upward trendline to confirm it.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a support zone around the 1.00845 level where we can also find the confluence of the upward trendline and the 4-hour 21 moving average. This is where we can expect the buyers to step in with a defined risk below the support zone to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows.
Upcoming Events
Today we get the US CPI report and the FOMC Minutes. Tomorrow, we will have the ECB Rate Decision, the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment Survey.
