USD

  • 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 CPI missed expectations across the board bringing the expectations for rate cuts forward.
  • The labour market is starting to show some weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board.
  • The US Consumer Confidence and University of Michigan Consumer Sentiment continue to fall.
  • The recent US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
  • The US Retail Sales yesterday beat expectations, while the US PPI missed forecasts by a big margin.
  • The recent Fedspeak has been leaning on the hawkish side, but this week’s inflation report pretty much confirmed that the Fed might be done for the cycle.
  • The market doesn’t expect the Fed to hike anymore.

EUR

  • 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 recent Eurozone CPI missed expectations on the headline figures, but the Core measure remained unchanged. This is unlikely to change the ECB’s stance anyway.
  • The labour market remains historically tight, but the unemployment rate recently 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 EURUSD broke above the key resistance around the 1.0760 level following the miss in the US CPI report. The price is now a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.

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 to wait for a pullback into the resistance turned support around the 1.0760 level where they will also find the confluence with the Fibonacci retracement levels, the trendline, the red 21 moving average and the daily blue 8 moving average.

EURUSD Technical Analysis – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

On the 1 hour chart, we can see more closely the bullish setup around the support with the price at the moment consolidating around the 1.0850 level. If the price breaks above the recent higher low at 1.0867, some aggressive buyers might already pile in to target another rally into the 1.0950 level. The sellers, on the other hand, will want to see the price breaking below the trendline to invalidate the bullish setup and switch the bias from bullish back to bearish.

Upcoming Events

Today the market’s focus will be on the latest US Jobless Claims figures given the recent softening in the labour market data.