Fundamental Overview
The USD has been weakening across the board ever since Fed’s Williams endorsed a December rate cut. The greenback then extended the losses further last week following soft ADP data and a Bloomberg report saying that Hassett emerged as the frontrunner for the Fed Chair position.
The probability for a December cut is now at 87%, which makes it a done deal. We won’t get much data before the FOMC meeting, so the focus will likely be mainly on jobless claims and ADP data, which haven’t been showing any strong improvement.
Weak data should keep weighing on the greenback, while strong data could provide some short-term reprieve. At the end of the day though, it’s all about the FOMC decision now and the following NFP and CPI reports.
On the EUR side, nothing has changed fundamentally. The ECB policymakers continue to repeat that the current policy is appropriate and that they won’t respond to small or shot-term deviations from their 2% target. The recent Eurozone data has been supporting the central bank neutral stance.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD has been trading in basically a 150-pip range since October as the lack of key US data releases and no big changes in macro fundamentals suppressed the volatility.
The price is slowly approaching the key swing point around the 1.1669 level and that’s where we can expect the sellers to step in with a defined risk above the level to position for a drop back into the 1.15 handle. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 1.1728 level next.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an upward trendline defining the bullish momentum. We can expect the buyers to lean on the trendline with a defined risk below it to keep pushing into new highs. The sellers, on the other hand, will look for a break lower to pile in for a drop into the 1.15 handle next.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as the buyers will have a better risk to reward setup around the trendline, while the sellers should get more conviction for more downside on a break below the trendline. The red lines define average daily range for today.
Upcoming Catalysts
Today we get the Eurozone Flash CPI. Tomorrow, we have the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment report.
