Fundamental
Overview
The USD weakened across the
board in the first part of the week but managed to erase all the losses
yesterday with an incredible rally. We haven’t got any catalyst for the move
but there was no reason for the weakness at the start of the week either.
Fed speakers this week
haven’t offered anything new and just reiterated that the labour market
weakness “forced” them to move towards neutral. This means that if we were to
get stronger labour market data, the Fed could start to turn more hawkish again
and we might not get another cut in October or December.
Looking ahead, we have the
US Jobless Claims report today and good data will likely give the greenback
another boost. Weak data, on the other hand, could lead to a pullback. The
biggest event will be the NFP report next Friday.
On the EUR side, the ECB
left interest rates unchanged at the last meeting as widely expected with
limited forward guidance other than the usual data-dependent approach. President
Lagarde made it clear that the central bank finished cutting rates after she
said that growth risks are balanced and the disinflationary process was over.
The market sees just 2 bps of easing by year-end and 10 bps in total by the end
of 2026.
EURUSD Technical
Analysis – Daily Timeframe
EURUSD daily
On the daily chart, we can
see that EURUSD broke below the major upward trendline yesterday and it’s now
consolidating just beneath it. This is where we can expect the sellers to pile
in with a defined risk above the trendline to position for a drop into the 1.16
support next. The buyers, on the other hand, will want
to see the price rising back above the trendline to position for a rally into
the 1.19 handle next.
EURUSD Technical
Analysis – 4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can
see more clearly the recent price action. The price is now consolidating
between the 1.1725 low and the major upward trendline. The sellers will look
for a break below the low to increase the bearish bets into the 1.16 support,
while the buyers will look for upside breakouts to keep targeting a new cycle
high.
EURUSD Technical
Analysis – 1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, there’s not much else we can add here as we
consolidate ahead of the US data release today. The focus will be on the US
jobless claims figures. Good data is likely to give the dollar another boost
and should lead to a downside break, while weak figures might provide a
pullback into the downward trendline. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the latest US Jobless Claims
figures, while tomorrow we conclude the week with the US PCE report. Keep also
an eye on Fed speakers this week.
