Fundamental Overview
The USD has been marginally weaker recently due to lower than expected US inflation figures last week that sent Treasury yields lower and made the market to price in higher chances of a second rate cut by the end of the year.
We’ve also got lots of whipsaws in the last couple of days caused by tariffs headlines. On Monday, the greenback weakened across the board following a
WSJ report saying that Trump would lay out the trade vision but won’t impose tariffs yet.
Yesterday, on the other hand, the US Dollar strengthened as Trump spoke to the media and said that
he intends to impose 25% tariffs on Canada and Mexico next week. Those gains were later erased, but Trump definitely brought more volatility.
On the EUR side, nothing has changed in the meantime. The latest
Eurozone CPI came in line with forecasts although the Core measure remained pretty sticky around 2.7%. As a reminder, the
ECB cut the policy rate by 25 bps at the last decision bringing it to 3.00%.
The central bank removed the passage saying that “it will keep policy rates sufficiently restrictive for as long as necessary” implying that upside inflation risks have faded. The market sees a 96% probability of a rate cut at the upcoming meeting and a total of 97 bps of easing by year end.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD is trading near a key
resistance zone around the 1.0450 level. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop back into the lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 1.06 handle next.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an upward
trendline defining the current bullish momentum. From a risk management perspective, the buyers will have a better risk to reward setup around the trendline to position for a break above the resistance. The sellers, on the other hand, will want to see the price breaking below the trendline to increase the bearish bets into new lows.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as the buyers will look for a break above the resistance, while the sellers will pile in around these levels to position for a pullback into the trendline. 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 Flash Eurozone and US PMIs.
This article was written by Giuseppe Dellamotta at
www.forexlive.com.
