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 US Consumer Confidence missed expectations although the labour market details improved.
  • 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 recently fell back into the 1.08 handle following strong US data. The sellers are looking at the 1.0723 level, but they will need to break the 1.08 level first to trigger a selloff into those lows. The trend recently turned bearish as the price started to print lower lows and lower highs, and the moving averages crossed to the downside. This should give the sellers some conviction for a move into new lows.

EURUSD Technical Analysis – 4 hour Timeframe

EURUSD Technical Analysis
EURUSD 4 hour

On the 4 hour chart, we can see more closely the key support around the 1.08 handle with the price recently bouncing on it before eventually falling back to it after a rejection of the 38.2% Fibonacci retracement level. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally back into the 1.10 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.0723 level.

EURUSD Technical Analysis – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

On the 1 hour chart, we can see that the recent price action into the support has been pretty choppy. This might be a signal of weakening momentum. We will likely need a catalyst to break below the support zone and next week we will have plenty of it. For now, we might start ranging around these levels awaiting new data to push on either side. A break above the minor black trendline should see the buyers increase the bullish bets into new highs as the sellers start to take some profits off the table.

Upcoming Events

Today we get the latest US Jobless Claims figures, while tomorrow we conclude with the US PCE and Fed Chair Powell.

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