USD
- The Fed left interest rates unchanged as expected at the last meeting with a shift in the statement that indicated the end of the tightening cycle.
- The latest US CPI slightly beat expectations but analysts expect the Core PCE to print at 0.2% M/M again following the CPI data.
- The labour market continues to soften but remains resilient with US Jobless Claims beating expectations week after week.
- The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
- The US Retail Sales beat expectations across the board.
- The University of Michigan Consumer Sentiment report jumped to the highest levels since 2021.
- The Fed members recently have been pushing back on the aggressive rate cuts expectations.
- The market’s expectations for the first rate cut were pushed back to May following strong economic data.
EUR
- The ECB left interest rates unchanged as expected at the last meeting maintaining the usual data dependent language.
- The recent Eurozone CPI missed expectations with the disinflationary process remaining intact.
- The labour market remains historically tight with the unemployment rate hovering at cycle lows.
- The last Eurozone PMIs missed expectations across the board with both the Manufacturing and Services sectors falling further into contraction.
- The ECB members recently have been pushing back against the aggressive rate cuts expectations.
- The market expects the ECB to cut rates in April.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD broke through the key trendline and opened the door for a fall into the 1.07 handle. We can see that the latest leg higher diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, given the break below the trendline the target for the reversal should be right around the 1.07 level.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair has been consolidating between the 1.0850 support and the 1.09 resistance. This is a key level as we have also the confluence with the 38.2% Fibonacci retracement level and the downward trendline. The sellers are likely piling in here with a defined risk above the resistance to position for a drop into the 1.07 handle. The buyers, on the other hand, will want to see a breakout to start targeting a rally into the 1.10 level.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action at the resistance zone and we can see that in the APAC session the price broke through the trendline, which might be a bad omen for the sellers. In fact, if the price were to break further through the resistance, then the breakout would be confirmed, and the buyers will likely pile in more aggressively to extend the rally into the 1.10 level. On the other hand, if the price were to erase the entire rally and break below the counter-trendline, then a fakeout would be confirmed and that’s generally a reversal pattern.
Upcoming Events
This week is a bit more tranquil on the data front with the major releases scheduled for the final part of the week. We begin tomorrow with the Eurozone and the US PMIs. On Thursday, we have the ECB rate decision and later in the day the Advance US Q4 GDP and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the US PCE report.
