Fundamental Overview

Yesterday, the USD weakened across the board following a benign US CPI report where the data came in line with expectations. The market firmed up the rate cuts expectations with September and December now fully priced in. We saw a general risk-on sentiment as a result and barring negative surprises in the following days and weeks, this trend might have some more legs.

On the EUR side, nothing has changed. The ECB speakers continue to confirm the first rate cut in June but don’t over-commit on the timing for the following rate cuts. The market expects three rate cuts this year, which is in line with the ECB members’ comments.

EURUSD Technical Analysis – Daily Timeframe

EURUSD Technical Analysis

On the daily chart, we can see that EURUSD yesterday surged into the 1.09 handle following the US CPI report. We are now seeing a rejection from the key swing level, which is totally normal after such a strong rally. The trend remains firmly bullish as the price keeps on printing higher highs and higher lows. The sellers will need the price to fall below the 1.0727 level to invalidate the bullish case and take back control.

EURUSD Technical Analysis – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

On the 1 hour chart, we can see more closely the rejection from the 1.09 handle. From a risk management perspective, the buyers will have a much better risk to reward setup around the 1.0820 level where they will find the confluence of the trendline and the 61.8% Fibonacci retracement level.

If the positive sentiment were to continue though and the price were to break above the 1.09 handle before pulling back to the support zone, the buyers will likely pile in anyway to target an extension into the 1.10 handle.

Upcoming Catalysts

Today the US Jobless Claims figures will take the centre stage as the market will want to see if the last week’s numbers were the start of a trend or just a blip.

See the video below