USD

  • The Fed left interest rates unchanged as expected 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 NFP report beat expectations on the headline number, but the unemployment rate and the average hourly earnings missed notably. Moreover, the US Jobless Claims beat expectations across the board with a big positive revision to Continuing Claims.
  • The latest US ISM Manufacturing PMI missed expectations by a big margin remaining in contraction with the US ISM Services PMI following suit but holding on in expansion.
  • The US Retail Sales missed expectations across the board although the data improved from the prior month.
  • The market expects the first 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 beat 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

EURUSD Technical Analysis
EURUSD Daily

On the daily chart, we can see that EURUSD invalidated the bearish setup as the price rallied back above the trendline and the 1.09 handle following the FOMC decision. The buyers will now look for dip-buying opportunities to keep targeting the 1.10 handle. The sellers, on the other hand, will want to see the price breaking back below the 1.09 handle to position for a drop into the 1.0723 support.

EURUSD Technical Analysis – 4 hour Timeframe

EURUSD Technical Analysis
EURUSD 4 hour

On the 4 hour chart, we can see that we had the confluence of the downward trendline and the red 21 moving average that were defining the downtrend. This got invalidated as the price broke above the levels and even rose above the 1.09 resistance. The price was 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 – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

On the 1 hour chart, we can see that we now have a strong support zone around the 1.09 handle where we can find the confluence of the 38.2% Fibonacci retracement level, the red 21 moving average and the 4-hour 8 moving average. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally into the 1.10 handle. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into the 1.0723 level.

Upcoming Events

Today we have some key economic data on the agenda with the release of the latest US Jobless Claims figures and the US PMIs.