Fundamental
Overview
The bullish momentum in the
US Dollar seems to be waning despite the recent higher-than-expected US CPI and PPI reports. One caveat is that the market has now
priced out the aggressive rate cuts expectations and it’s almost perfectly in
line with the Fed’s projections.
Therefore, we will likely
need more strong US data to see the market pricing in an earlier pause in the
Fed’s easing cycle and give the US Dollar a further boost. The next big risk
events will be in November when we get the October data, the FOMC policy
decision and the US election.
On the EUR side, tomorrow
we have the ECB rate decision where the central bank is expected to cut by 25
bps. The market then sees another 25 bps cut in December and four more in 2025.
EURUSD Technical
Analysis – Daily Timeframe
EURUSD Daily
On the daily chart, we can
see that EURUSD extended the drop further although the momentum seems to be
slowing. From a risk management perspective, the sellers will have a better
risk to reward setup around the 1.10 handle where they will also find 38.2% Fibonacci
retracement level for confluence. The buyers, on the other hand,
will want to see the price breaking above the 1.10 handle to start targeting
the 1.12 handle next.
EURUSD Technical
Analysis – 4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can
see that we have a downward trendline
defining the current bearish momentum. The sellers will likely keep on leaning
on the trendline to position for new lows, while the buyers will look for a
break higher to pile in for a rally into the 1.10 resistance.
EURUSD Technical
Analysis – 1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, there’s
not much more we can add although aggressive buyers will likely pile in on a
break above the most recent lower high at 1.0895. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we have the ECB Rate Decision, the US Retail Sales and the US Jobless
Claims data.
