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 US Jobless Claims beat expectations across the board.
  • The latest US Manufacturing PMI beat expectations while the Services PMI missed slightly. Both the measures remain in expansion though.
  • 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 sold off into the weekend as the US data surprised once again to the upside. The trend might have changed as the price continues to print lower lows and lower highs with the moving averages being crossed to the downside. The price bounced on the 1.08 handle as the selloff got 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 the pair bounced on a key support around the 1.08 handle and it’s now at the 38.2% Fibonacci retracement level. This is where we can expect the sellers to step in with a defined risk above the Fibonacci level to position for a drop back into the 1.08 support targeting a break below it. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 1.10 handle.

EURUSD Technical Analysis – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

On the 1 hour chart, we can see more closely the key levels marked on the chart. We now have a counter-trendline and the red 21 moving average giving support for the buyers. If we were to get a pullback, the buyers will likely lean on the trendline 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 have the US Durable Goods Orders and the US Consumer Confidence report. Tomorrow, we have Fed’s Waller speaking. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude with the US PCE and Fed Chair Powell.