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 US GDP beat expectations by a big margin.
- The US PCE came mostly in line with expectations and the Core 3-month and 6-month annualised rates are now below the Fed’s 2% target.
- The labour market continues to soften but remains resilient with US Jobless Claims missing expectations last week but hovering around cycle lows.
- 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 sees a 50/50 chance of a rate cut in March.
EUR
- The ECB left interest rates unchanged as expected 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 record 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 continues to slowly approach the key support level around the 1.07 handle where we can also find the 61.8% Fibonacci retracement level for confluence. That’s where we can expect the buyers to step in more aggressively with a defined risk below the level to position for a rally into new highs.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair has been trading inside a falling wedge with the buyers leaning on the bottom trendline while the sellers kept on piling in around the top trendline. A breakout to the downside should see the sellers increasing their bearish bets and lead to a selloff into the 1.07 support. Conversely, a breakout to the upside is likely to trigger a quick reversal with the price rallying into the 1.10 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor trendline inside the wedge where the sellers might lean onto to position for a breakout with a better risk to reward setup. In fact, if the price were to pull back again into the trendline the sellers will also find the 50% Fibonacci retracement level for confluence. If the price were to break higher though, the buyers will likely pile in to position for a rally into the upper bound of the wedge and target a breakout. The sellers will also have another opportunity at the top trendline nonetheless.
Upcoming Events
This week is going to be a really busy one with the FOMC rate decision and lots of economic data on the agenda. We begin today with the US Job Openings and the US Consumer Confidence reports. Tomorrow we will see the US Employment Cost Index and the ADP data before the FOMC rate decision later in the day. On Thursday, we get the latest Eurozone CPI report and later in the day the US Jobless Claims figures and the ISM Manufacturing PMI. Finally, on Friday, we conclude the week with the US NFP report.
