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 US PMIs beat expectations by a big margin for both the Manufacturing and Services measures.
- 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 Eurozone PMIs beat expectations on the Manufacturing side but missed on the Services one with both measures remaining in 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 drop 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. Yesterday the price probed above the resistance zone but got smacked back down following the big beat in the US PMIs. The pair is trading inside what looks like a falling wedge and another break of the resistance could see the buyers piling in again to target the 1.10 handle. The sellers, on the other hand, will keep on defending the resistance to position for a drop into the 1.07 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that this morning the price has been pulling back into the resistance zone where we can also find the Fibonacci retracement levels and the trendline for confluence. The sellers will likely step in again here with a defined risk above the resistance to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to gain some more conviction and target the 1.10 level.
Upcoming Events
Today we have the ECB rate decision where the central bank is expected to keep everything unchanged, while later in the day we will see the Advance US Q4 GDP and the latest US Jobless Claims figures. Tomorrow, we conclude the week with the US PCE report.
