EURUSD Technical Analysis – The market is “selling the fact”

Fundamental
Overview

The USD regained some
ground in the final part of last week although we haven’t got any meaningful
catalyst for the move. Overall, we continue to range as the market is waiting
for something new for the next sustained trend. Given that the “short US dollar”
is now the most crowded trade, it will take something meaningful to lead the
market to expect more rate cuts than currently priced in.

On the EUR side, we finally
got the US-EU trade deal which should reduce uncertainty. Many ECB members are
now taking a much more neutral approach to rate cuts. They will need significant
negative data to force them to cut further. The market is pricing around 65%
chance of a cut in December but given the deal, and the ECB easing and fiscal
expansion in the pipeline, the ECB might really be done with rate cuts for the
time being.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that we have a key support
around the 1.1575 level. If the price gets there, we can expect the buyers to
step in with a defined risk below the level to position for a rally into a new
cycle high. The sellers, on the other hand, will look for a break lower to
increase the bearish bets and target the 1.11 handle next.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we had a minor support zone around the 1.1720 level that got breached
today as the market is likely “selling the fact” on the 15% US-EU trade deal
that was already expected since the FT report.

If we get a pullback into
the support-turned-resistance, we can expect the sellers to lean on it with a
defined risk above it to keep targeting the 1.1575 support. The buyers, on the
other hand, will look for a break higher to invalidate the bearish setup and
position for a rally into new highs.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s not much else we can add here as the sellers would be better off shorting from the 1.1720 resistance, while the buyers don’t have key supports where to lean on around these levels. The red
lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the get US Job Openings and
Consumer Confidence data. On Wednesday, we have the US ADP, the US Q2 GDP and
the FOMC rate decision. On Thursday, we get the US PCE price index, the US
Jobless Claims and the US Employment Cost Index. Finally, on Friday, we
conclude the week with the US NFP report and the US ISM Manufacturing PMI.

This article was written by Giuseppe Dellamotta at investinglive.com.