Fundamental Overview

The USD weakened across the board since last Friday following the soft US NFP report. The data showed some more labour market cooling with an increase in the unemployment rate and a decrease in wage growth. We basically have an economy that is slowing but still growing. We will see if the market will be able to keep the positive sentiment on soft landing hopes or start to worry about a recession.

The EUR, on the other hand, gained last week against the US Dollar mainly because of the risk-on sentiment as the US data continued to support at least two rate cuts from the Fed but didn’t send recessionary signals. On the political front, the French elections ended up in a loss for Le Pen’s National Rally party but also a hung parliament.

EURUSD Technical Analysis – Daily Timeframe

EURUSD Technical Analysis

On the daily chart, we can see that EURUSD eventually managed to extend the rally above the 1.08 handle but consolidated just above it since the US NFP report.

The buyers will likely step in around these levels to keep pushing towards the 1.09 resistance next. The sellers, on the other hand, will want to see the price falling back below the 1.08 level to regain some near-term control.

EURUSD Technical Analysis – 4 hour Timeframe

EURUSD Technical Analysis
EURUSD 4 hour

On the 4 hour chart, we can see more clearly the recent break and consolidation just above the 1.08 handle. We now have a nice support zone around the 1.0780 level where we can find the confluence of the previous swing high, the trendline and the 50% Fibonacci retracement level.

If we get a pullback into that support, we can expect the buyers to step in with a defined risk below the trendline to position for a continuation of the rally into the 1.09 resistance. The sellers, on the other hand, will want to see the price breaking below the trendline to increase the bearish bets into the 1.0727 support.

EURUSD Technical Analysis – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

On the 1 hour chart, we can see that the buyers will have the option to step in around the 1.0812 level or the trendline around the 1.0780 level. The sellers, on the other hand, will likely pile in on every break lower. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have Fed Chair Powell testifying to Congress and the markets will be focused on any view or hint about monetary policy after the recent NFP report. Thursday will be the most important day of the week as we get the US CPI and the US Jobless Claims figures. Finally, on Friday, we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.

See the video below