USD
- The Fed left interest rates unchanged as expected at the last meeting and dropped the tightening bias in the statement.
- The US PCE came in line with expectations.
- The NFP report beat expectations on the headline number, but the unemployment rate and the average hourly earnings missed notably.
- The latest US ISM Manufacturing PMI missed expectations by a big margin remaining in contraction with the US ISM Services PMI following suit but holding on in expansion.
- The US Consumer Confidence missed expectations across the board.
- The market expects the first rate cut in June.
EUR
- The ECB left interest rates unchanged as expected at the last meeting revising inflation and growth expectations downwards and maintaining the usual data dependent language.
- The recent Eurozone CPI beat expectations.
- The labour market remains historically tight with the unemployment rate hovering at record lows.
- The latest 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 market expects the ECB to cut rates in June.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD last week almost reached the 1.10 handle as the US Dollar remained under pressure amid weaker US data. From a risk management perspective, the buyers will have a much better risk to reward setup around the trendline where they will also find the red 21 moving average for confluence. The sellers, on the other hand, will want to see the price breaking below the trendline to invalidate the bullish setup and position for new lows.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the buyers will also find the 61.8% Fibonacci retracement level around the trendline for extra confluence. A break below the trendline would bode well for the sellers as the technical trend will likely turn around. For now, the buyers remain in control with the 1.10 handle as target. A break above that level should see the buyers increasing their bullish bets into the 1.1145 high.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the buyers have another strong support zone around the 1.0920 where we can find the confluence of the minor trendline, the 50% Fibonacci retracement level and the 4-hour 21 moving average. This is where we can expect the buyers to step in with a defined risk below the trendline to position for a rally into the 1.10 handle. The sellers, on the other hand, will want to see the price breaking lower to invalidate this bullish setup and position for a drop into the major trendline.
Upcoming Events
Today we have the main event of the week, that is the US CPI report. On Thursday we get the US PPI, the US Retail Sales and the US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
