US

  • The Fed left interest rates unchanged as expected with basically no change to the statement.
  • Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
  • The recent US Core PCE came in line with expectations.
  • The labour market is starting to show some weakness as Continuing Claims are now rising at a fast pace and the NFP data last Friday missed across the board.
  • The US Consumer Confidence fell for the third consecutive month although the data beat expectations.
  • The US ISM Manufacturing PMI last week missed expectations by a big margin, followed later on Friday with a disappointing ISM Services PMI, although the index remained in expansion.
  • The market doesn’t expect the Fed to hike anymore.

EU

  • The ECB left interest rates unchanged as expected as the central bank has ended its tightening cycle.
  • President Lagarde highlighted the weakness in the Eurozone economy and reaffirmed that rates will make a substantial contribution to curbing inflation.
  • The Eurozone CPI missed expectations on the headline figures but the Core measure remained unchanged. This won’t change the ECB’s stance anyway.
  • The labour market remains very tight but the unemployment rate last week ticked higher.
  • The recent Eurozone PMIs missed across the board as the economy continues to struggle.
  • The market doesn’t expect the ECB to hike anymore.

EURUSD Technical Analysis – Daily Timeframe

EURUSD Technical Analysis
EURUSD Daily

On the daily chart, we can see that the EURUSD pair bottomed around the 1.05 support and extended the rally last Friday following the miss in the NFP data. The price is now rejecting the resistance around the 1.0760 level where we have also the 38.2% Fibonacci retracement level for confluence. We can also notice that the price got a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback or some consolidation before a continuation.

EURUSD Technical Analysis – 4 hour Timeframe

EURUSD Technical Analysis
EURUSD 4 hour

On the 4 hour chart, we can see that from a risk management perspective, the buyers would be better off waiting for a pullback into the recent swing level at 1.0670 where they will find the confluence with the red 21 moving average and the 38.2% Fibonacci retracement level. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets and position for a drop back to the lows.

EURUSD Technical Analysis – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

On the 1 hour chart, we can see that the price recently broke below the upward trendline suggesting that the near-term momentum is skewed to the downside. The sellers piled in to target the support around the 1.0670 level, while the buyers are likely waiting to step in at the support zone with an even better risk to reward setup. A break below the support would invalidate the bullish setup and give sellers back control.

Upcoming Events

This week is pretty empty on the data front with just the US Jobless Claims on Thursday and the University of Michigan Consumer Sentiment on Friday. The market is likely to focus on the US Jobless Claims on Thursday given the recent weakness in the labour market data.

See the video below