Fundamental Overview

The USD came back with a vengeance last Friday following the strong US NFP report where the data surprised with solid job and wage growth. There were also negatives like the uptick in the unemployment rate, but all in all, we can say that it was a good report.

The data triggered a hawkish repricing in interest rates expectations with the market now expecting once again just one cut by the end of the year. It’s not a big deal in the bigger picture, but for now the sentiment is bullish for the greenback and we will likely need a catalyst to change it again.

The EUR, on the other hand, has been gaining ground against the USD mainly because of the Dollar weakness amid the general risk-on sentiment regime due to the pickup in global growth.

This sentiment has been changed by the NFP data and the European elections over the weekend where we got some governments like France calling snap elections which added even more pressure on the single currency due to political uncertainty.

All eyes will now be on the US CPI and FOMC decision on Wednesday as that day can turn the sentiment around or exacerbate it further.

EURUSD Technical Analysis – Daily Timeframe

EURUSD Technical Analysis

On the daily chart, we can see that EURUSD sold off following the strong US NFP report and broke the 1.08 support. The breakout of the range gave the sellers more control with the first target now standing around the 1.0727 level.

That’s where we can expect the buyers to step in with a defined risk below the level to position for a rally into new highs with a better risk to reward setup.

EURUSD Technical Analysis – 4 hour Timeframe

EURUSD Technical Analysis
EURUSD 4 hour

On the 4 hour chart, we can see more clearly the breakout of the range. We can see that we have also the 61.8% Fibonacci retracement level of the entire rally from the 1.06 region standing around the 1.0727 level. This looks like an important level for market participants.

The buyers will want to see a bounce, while the sellers will want to see a break to extend the downtrend back into the 1.06 region.

EURUSD Technical Analysis – 1 hour Timeframe

EURUSD Technical Analysis
EURUSD 1 hour

On the 1 hour chart, we can see that from a risk management perspective, the sellers will be better off waiting for a pullback into the 1.08 resistance where we can also find the 38.2% Fibonacci retracement level for confluence.

The red lines show the average daily range for today, so in case the price reaches one of the two zones, the market participants will have defined levels where to protect their stops.

Upcoming Catalysts

This week is a bit empty on the data front although we will have the biggest market moving events on Wednesday when we get the US CPI data and the FOMC rate decision. On Thursday, we have the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.