USD
- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The recent US CPI missed expectations across the board bringing the expectations for rate cuts forward.
- The labour market is starting to show weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board, but yesterday the US Jobless Claims beat forecasts giving the USD a short-term boost.
- The latest US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
- The recent US Retail Sales beat expectations, while the US PPI missed forecasts by a big margin.
- The recent Fedspeak has been leaning on the hawkish side, but last week’s inflation report pretty much confirmed that the Fed might be done for the cycle.
- The market doesn’t expect the Fed to hike anymore.
EUR
- The ECB left interest rates unchanged as expected as the central bank has ended its tightening cycle.
- President Lagarde highlighted the weakness in the Eurozone economy and reaffirmed that rates will make a substantial contribution to curbing inflation.
- The recent Eurozone CPI missed expectations on the headline figures, but the Core measure remained unchanged. This is unlikely to change the ECB’s stance anyway.
- The labour market remains historically tight, but the unemployment rate recently ticked higher.
- The recent Eurozone PMIs missed across the board as the economy continues to struggle.
- The ECB members continue to repeat that they will keep rates steady as long as necessary to get inflation back to target.
- The market doesn’t expect the ECB to hike anymore.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD rejected the key swing level at 1.0950 and pulled back into the blue 8 moving average as the rally at some point got too overstretched. The recent weakness in the US data weighed on the US Dollar giving a boost to the Euro. Today, the Eurozone PMIs slightly beat expectations but the market has barely moved. It might be a slow end of the week.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price diverged with the MACD into the key swing level. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we are still in the pullback territory as long as the price stays above the trendline. From a risk management perspective, the buyers should be leaning on the trendline around the recent swing low with a defined risk below the trendline and target new highs.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action with the price reacting to the recent lower highs. This is where we can expect some sellers to step in to target a drop into the trendline. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs.
Upcoming Events
Today the US is on holiday for Thanksgiving Day and therefore the liquidity in the market will be thinner. Tomorrow we conclude the week with the US PMIs.
