USD
- The Fed left interest rates unchanged as expected while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
- Fed Chair Powell stressed that they want to see more evidence of inflation falling back to target and that a rate cut in March is not their base case.
- The latest US GDP beat expectations by a big margin.
- The US PCE came mostly in line with expectations with the Core 3-month and 6-month annualised rates falling below the Fed’s 2% target.
- The US Job Openings surprised to the upside although the hiring and quit rates remain below pre-pandemic levels. The US Jobless Claims, on the other hand, missed expectations for the second consecutive week although they remain near the cycle lows.
- The ISM Manufacturing PMI surprised to the upside with the new orders index, which is considered a leading indicator, jumping back into expansion.
- The US Retail Sales beat expectations across the board.
- The US Consumer Confidence report came in line with expectations, but the labour market details improved considerably.
- The market now expects the first rate cut in May.
EUR
- The ECB left interest rates unchanged as expected maintaining the usual data dependent language.
- The Eurozone CPI came in line with expectations with the disinflationary process remaining intact.
- The labour market remains historically tight with the unemployment rate hovering at record lows.
- The Eurozone PMIs beat expectations on the Manufacturing side but missed on the Services one with both measures remaining in contraction.
- The ECB members recently have been pushing back against the aggressive rate cuts expectations leaning on June for the first rate cut.
- The market expects the ECB to cut rates in April.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD continues to drift lower with the red 21 moving average acting as dynamic resistance. The sellers will likely step in again around these levels to position for a drop into the 1.0723 support where we can also find the 61.8% Fibonacci retracement level for confluence. The buyers, on the other hand, will want to see the price breaking higher to pile in more aggressively and target the 1.10 handle.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair has been trading inside a falling wedge with the buyers leaning on the bottom trendline while the sellers kept on piling in around the top trendline. A breakout to the downside should see the sellers increasing their bearish bets and lead to a selloff into the 1.0723 support. Conversely, a breakout to the upside is likely to trigger a quick reversal with the price rallying into the 1.10 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the pair yesterday doing a quick round trip into the top trendline. We have now a minor support zone around the 1.0865 level. This is where we can expect the buyers to step in with a defined risk below the support to position for a breakout and target the 1.10 handle. The sellers, on the other hand, will want to see the price breaking lower to gain even more conviction and target the 1.0723 support.
Upcoming Events
Today we have the US NFP report which is expected at 180K with estimates ranging from a low of 120K to a high of 290K. A number out of the range will cause a strong market reaction.
