Fundamental Overview
The USD weakened across the board in the first part of the week but managed to erase all the losses yesterday with an incredible rally. We haven’t got any catalyst for the move but there was no reason for the weakness at the start of the week either.
Fed speakers this week haven’t offered anything new and just reiterated that the labour market weakness “forced” them to move towards neutral. This means that if we were to get stronger labour market data, the Fed could start to turn more hawkish again and we might not get another cut in October or December.
Looking ahead, we have the US Jobless Claims report today and good data will likely give the greenback another boost. Weak data, on the other hand, could lead to a pullback. The biggest event will be the NFP report next Friday.
On the EUR side, the ECB left interest rates unchanged at the last meeting as widely expected with limited forward guidance other than the usual data-dependent approach. President Lagarde made it clear that the central bank finished cutting rates after she said that growth risks are balanced and the disinflationary process was over. The market sees just 2 bps of easing by year-end and 10 bps in total by the end of 2026.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD broke below the major upward trendline yesterday and it’s now consolidating just beneath it. This is where we can expect the sellers to pile in with a defined risk above the trendline to position for a drop into the 1.16 support next. The buyers, on the other hand, will want to see the price rising back above the trendline to position for a rally into the 1.19 handle next.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the recent price action. The price is now consolidating between the 1.1725 low and the major upward trendline. The sellers will look for a break below the low to increase the bearish bets into the 1.16 support, while the buyers will look for upside breakouts to keep targeting a new cycle high.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as we consolidate ahead of the US data release today. The focus will be on the US jobless claims figures. Good data is likely to give the dollar another boost and should lead to a downside break, while weak figures might provide a pullback into the downward trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude the week with the US PCE report. Keep also an eye on Fed speakers this week.
