FundamentalOverview
The USD last week saw aquick dip across the board following the soft US CPI report as the market priced back in two ratecuts by the end of the year. The moves were reversed soon after though as wegot a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed expected just one cut forthis year despite the soft US CPI report.
Later on, Fed Chair Powell backpedalled on the projections making them abit less worrying as the central bank remains very data dependent. The USDollar eventually got supported in the last part of the last week as the risksentiment turned more cautious.
The EUR, on the other hand,got hit hard by the European elections as the political uncertaintyweighed on the sentiment and led to some increase in bonds risk premia andselloff in European stocks.
The risk sentiment has beengradually improving this week although we are not out of the woods yet. The FlashPMIs on Friday will likely be important catalysts in this regard.
EURUSD TechnicalAnalysis – Daily Timeframe
On the daily chart, we cansee that EURUSD has been pulling back this week after breaking through the key 1.0727support zone. This is coming amid general US Dollar weaknessas the risk sentiment has been gradually improving. The buyers are gaining abit more confidence as the price rallied back above the 1.0727 level.
EURUSD TechnicalAnalysis – 4 hour Timeframe
On the 4 hour chart, we cansee that we have a good resistance around the 1.0760 level where we can findthe confluenceof the trendlineand the 50% Fibonacci retracement.
This is where we can expectthe sellers to step in with a defined risk above the trendline to position fora drop into the 1.06 handle with a better risk to reward setup. The buyers, onthe other hand, will want to see the price breaking higher to increase thebullish bets into the 1.09 handle.
EURUSD TechnicalAnalysis – 1 hour Timeframe
On the 1 hour chart, we cansee that the price has been printing higher highs and higher lows on thistimeframe as the bullish momentum started to pick up amid improving sentiment. Thesellers will want to see the price falling below the swing low at 1.0710 to regaincontrol and increase the bearish bets into new lows. The red lines define the average daily range for today.
UpcomingCatalysts
Tomorrow we have the US Housing Starts, Building Permits and the latest USJobless Claims figures. On Friday, we conclude the week with the Eurozone andUS PMIs.
