Fundamental
Overview
The USD weakened across the
board since last Friday following the soft US NFP report. The data showed some more labour
market cooling with an increase in the unemployment rate and a decrease in wage
growth. We basically have an economy that is slowing but still growing. We will
see if the market will be able to keep the positive sentiment on soft landing
hopes or start to worry about a recession.
The EUR, on the other hand,
gained last week against the US Dollar mainly because of the risk-on sentiment
as the US data continued to support at least two rate cuts from the Fed but
didn’t send recessionary signals. On the political front, the French
elections ended up in a loss for Le Pen’s National Rally party but also a
hung parliament.
EURUSD Technical
Analysis – Daily Timeframe
EURUSD Daily
On the daily chart, we can
see that EURUSD eventually managed to extend the rally above the 1.08 handle
but consolidated just above it since the US NFP report.
The buyers will likely step
in around these levels to keep pushing towards the 1.09 resistance
next. The sellers, on the other hand, will want to see the price falling back below
the 1.08 level to regain some near-term control.
EURUSD Technical
Analysis – 4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can
see more clearly the recent break and consolidation just above the 1.08 handle.
We now have a nice support zone around the 1.0780 level where we can find the confluence
of the previous swing high, the trendline
and the 50% Fibonacci
retracement level.
If we get a pullback into
that support, we can expect the buyers to step in with a defined risk below the
trendline to position for a continuation of the rally into the 1.09 resistance.
The sellers, on the other hand, will want to see the price breaking below the
trendline to increase the bearish bets into the 1.0727 support.
EURUSD Technical
Analysis – 1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, we can
see that the buyers will have the option to step in around the 1.0812 level or
the trendline around the 1.0780 level. The sellers, on the other hand, will
likely pile in on every break lower. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we have Fed Chair Powell testifying to Congress and the markets will be
focused on any view or hint about monetary policy after the recent NFP report.
Thursday will be the most important day of the week as we get the US CPI and
the US Jobless Claims figures. Finally, on Friday, we conclude the week with
the US PPI and the University of Michigan Consumer Sentiment survey.
