The Fed
is waiting for the totality of the data to be released before deciding what to
do at their September meeting. As of now, the data supports the soft-landing
narrative as the disinflation in the core measures
continues but the strength in the labour market and consumer spending might
keep inflation higher for longer. This is something that might translate into
more rate hikes or a “higher for longer-er” stance. Recently the long-term
Treasury yields have been rising non-stop and this has benefited the US Dollar
but the reason for such a rally is still unclear.
The ECB, on the other hand, hiked by 25 bps and
changed a line in the statement that leant more on the dovish side. President
Lagarde didn’t hint to what we can expect next and, in line with the Fed, just
reaffirmed their data dependency and kept all the options on the table. The
data for the Eurozone has been consistently missing expectations, but the
recent inflation and employment reports
remained strong justifying another rate hike in September all else being equal.
EURUSD Technical Analysis –
Daily Timeframe
EURUSD Daily
On the daily chart, we can see that EURUSD broke
through the trendline,
retested it and continued lower towards the next support at
1.0832. The sellers are in control and the trend is clearly bearish as the
price keeps printing lower lows and lower highs with the moving averages crossed
to the downside. The next big level will be the trendline around the 1.08
handle as a break below it would open the door for a selloff into the 1.0515
level.
EURUSD Technical Analysis –
4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can see that we’ve been diverging with the
MACD for a
while. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, we are likely to see the pullbacks and a
good resistance will be the one around the 1.0940 level as we have the
trendline and the 38.2% Fibonacci retracement level.
This is where the sellers are likely to pile in with a defined risk above the
trendline and target the 1.08 handle.
EURUSD Technical Analysis –
1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, we can see that the
recent price action is forming a falling wedge. This
is generally a reversal pattern as we can notice that we have also a divergence
with the MACD. The target is often the top of the wedge which would coincide
with the previously mentioned resistance around the 1.0940 level. The price
will need to break above the top trendline though to confirm the pullback into
the resistance. Note also that failed patterns can be even more meaningful as
they tell you that the momentum is very strong and the market clearly wants to
go into that direction.
See also the video below: