USD
- The Fed left interest rates unchanged as expected at the last meeting while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
- The US CPI beat expectations for the second consecutive month with the disinflationary trend stalling.
- The US PPI beat expectations across the board by a big margin.
- The US Jobless Claims beat expectations with the data remaining steady.
- The latest US PMIs increased further from the prior month with the Manufacturing PMI beating expectations and the Services PMI missing.
- The US Retail Sales missed expectations across the board by a big margin.
- The market now expects the first rate cut in June.
EUR
- The ECB left interest rates unchanged as expected at the last meeting 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 Services side with the measure jumping back into expansion while the Manufacturing one missed dragged lower by Germany’s performance.
- The ECB members recently have been pushing back against the aggressive rate cuts expectations placing more weight on wage growth and data dependency.
- The market expects the ECB to cut rates in June.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD recently broke through the key trendline and extended the rally into the 1.09 handle. We can expect the sellers to keep on defending the 1.09 resistance with a defined risk above it and position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 1.10 handle.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke below the upward trendline yesterday but eventually reversed the move and ended the day at the highs. The bullish momentum might be fading at these levels but another extension into the 1.09 handle could still happen. Nevertheless, the buyers should step in around the trendline to target a rally into the resistance, while the sellers will want to see the price falling back below the trendline to pile in and target the 1.08 support first and upon a further break lower, the 1.02 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a strong support zone around the 1.0838 level where we can also find the confluence with the trendline and the red 21 moving average. This is where the buyers should step in to position for a rally into the resistance, while the sellers should target a break below the support to confirm a drop into the 1.08 handle.
Upcoming Events
This week we have some important economic data on the agenda. We begin today with the release of the US Consumer Confidence report. On Thursday, we will see the US PCE and the latest US Jobless Claims figures. Finally, on Friday, we conclude the week with the Eurozone CPI and the US ISM Manufacturing PMI.
