Fundamental
Overview
The USD continues to be
supported against most major currencies, especially the commodity currencies, as
the markets remain in a risk-off mood following some bad US data releases. In
fact, since last Friday, we got weak US Flash Services PMI, UMich
final Consumer Sentiment and yesterday a weak US
Consumer Confidence report.
The problem is that we’ve
also got inflation expectations jumping to new highs in both the UMich and the Conference
Board report. The market might be fearing that in case we get a slowdown, the
Fed might not be fast enough in cutting rates amid inflation remaining above
target and uncomfortably high long-term inflation expectations.
This is something to keep
in mind in light of the next NFP and CPI reports coming out before the March
FOMC decision where we will also get the updated SEP and Dot Plot.
On the EUR side, the ECB
speakers have been coming a bit less dovish recently as they’ve been cautioning
against cutting rates too fast. Last week, we got the Eurozone PMIs which showed steady growth
with another pick up in the manufacturing index, which is more sensitive to the
business cycles. The market is expecting another 25 bps cut at the upcoming
meeting with a total of 81 bps of easing by year-end.
EURUSD Technical
Analysis – Daily Timeframe
EURUSD Daily
On the daily chart, we can
see that the EURUSD is trading near the 1.0532 resistance. The sellers will likely step in
around these levels with a defined risk above the resistance to position for a
drop into the 1.02 handle. The buyers, on the other hand, will look for a break
higher to increase the bullish bets into new highs.
EURUSD Technical
Analysis – 4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can
see that we have an upward trendline defining the bullish momentum.
If we get a pullback into the trendline, we can expect the buyers to lean on it
with a defined risk below it to position for a rally into the 1.06 handle. The
sellers, on the other hand, will look for a break lower to increase the bearish
bets into new lows.
EURUSD Technical
Analysis – 1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, there’s
not much else we can add here as the buyers will want to lean on the trendline
to position for new highs or wait for a break above the resistance, while the
sellers will look for a break below the trendline to increase the bearish bets
into the 1.02 handle next. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we get the latest US Jobless Claims
figures, while on Friday we conclude the week with the France CPI, the German
CPI and the US PCE data.
