USD
- The Fed left interest rates unchanged as expected while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
- Fed Chair Powell stressed that they want to see more evidence of inflation falling back to target and that a rate cut in March is not their base case.
- The latest US GDP beat expectations by a big margin.
- The US PCE came mostly in line with expectations with the Core 3-month and 6-month annualised rates falling below the Fed’s 2% target.
- The US NFP report beat expectations across the board by a big margin.
- The ISM Manufacturing PMI surprised to the upside with the new orders index, which is considered a leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat expectations across the board with the employment sub-index erasing the prior drop and prices paid jumping above 60.
- The US Consumer Confidence report came in line with expectations but the labour market details improved considerably.
- The market now expects the first rate cut in May.
EUR
- The ECB left interest rates unchanged as expected maintaining the usual data dependent language.
- The recent Eurozone CPI came in line with expectations with the disinflationary process continuing steady.
- 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 bounced from the key support zone at the 1.0723 level and pulled back into the blue 8 moving average where it started to consolidate as the sellers began to pile in. We can see that we have an even better resistance zone around the trendline as there’s also the red 21 moving average for confluence. If the pair were to extend the rally into the trendline we can expect the sellers to pile in even more aggressively. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and start targeting the 1.10 handle.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair is trading inside a rising channel which could end up being a bearish flag in case the price continues lower. We can notice that the sellers continued to step in around the previous swing low level where we have also the 38.2% Fibonacci retracement level for confluence. The buyers will need a strong catalyst to break above this resistance. The sellers, on the other hand, will want to see the price breaking decisively the channel to the downside to increase the bearish bets and target new lows.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is breaking the channel but is finding some support around the most recent low at 1.0756. The US CPI report today will be a big catalyst and we will definitely see some strong moves afterwards, so watch out for the data today, because it will likely decide where the pair will go in the next couple of weeks.
Upcoming Events
Today we have the main event of the week, that is, the US CPI report. On Thursday we will see latest US Jobless Claims figures and the US Retail Sales. Finally, on Friday, we conclude the week with the US PPI data and the University of Michigan Consumer Sentiment survey.
