US:
- The Fed left interest rates unchanged as
expected. - The macroeconomic projections were revised higher
as the economy showed much stronger resilience than expected and the Dot Plot
showed that the majority of members still expects another rate hike by the end
of the year with less rate cuts in 2024. - Fed Chair Powell
reaffirmed their data dependency but added that they will proceed carefully as
they are trying to find the optimal level of rates. Powell also added that the
soft landing is not the base case at the moment, although they are aiming for
it. - The latest US CPI came
in line with expectations with the Core measure continuing to show
disinflation. - The labour market
displayed signs of softening although it remains fairly solid as seen also last
week with the strong beat in Jobless Claims. - The US Consumer Confidence this
week missed expectations although the jobs details were positive. - The market doesn’t expect the Fed to hike again at
the moment.
EU:
- The ECB hiked by 25 bps at the
last meeting and added a line in the statement that hinted to the end of the
tightening cycle. - President Lagarde didn’t push back against the idea
of them having reached already the terminal rate and highlighted the slowdown
in Eurozone economy. - Inflation measures
did soften a bit lately but remain uncomfortably high. - The labour market remains
very tight with the unemployment rate hovering at record low levels. - Overall, the economic data lately has been showing
signs of fast deterioration in the
economy pointing to a possible recession in the near future. - The majority of ECB members is leaning towards
keeping rates higher for longer now. - The market doesn’t expect the ECB to hike anymore.
EURUSD Technical Analysis –
Daily Timeframe
EURUSD Daily
On the daily chart, we can see that the EURUSD pair
has finally reached the 1.05 handle, which was the first main target of this
incredible selloff. The pair is now a bit overstretched to the downside and we
might see a bounce on this key level. From a risk management perspective, the
sellers would be better off to lean on the major trendline where
there’s also the red 21 moving average, but we
might need weak US data or strong Eurozone readings to rally all the way up to
that area.
EURUSD Technical Analysis –
4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can see that we have also
the 38.2% Fibonacci retracement level
and the 1.07 handle around the major trendline, so that’s going to be a strong resistance if the
price gets there. Right now, the sellers are in control, and we might see them
coming back strongly already at the minor trendline where they will also have
the confluence with the
moving averages. The buyers, on the other hand, will want to see the price
breaking above the minor trendline to position for a rally into the major
trendline.
EURUSD Technical Analysis –
1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, we can see more
closely the bearish setup around the minor trendline with the Fibonacci
retracement levels for confluence. That’s where we can expect the sellers to
pile in with a defined risk above the trendline to position for a break below
the 1.05 handle and much lower prices next. The buyers, on the other hand, are
likely to start piling in already here around the 1.05 handle to target a
correction into the major trendline.
Upcoming Events
Today the main event will be the US Jobless Claims
report. Strong data is likely to keep the USD supported while weak readings
might weigh on the greenback in the short term. Tomorrow, we will see the
latest Eurozone CPI, which shouldn’t change much for the ECB unless we see some
big surprises, and finally the US PCE data.