Fundamental
Overview
The USD has been weakening
across the board ever since Fed’s Williams endorsed a December rate cut. The
greenback then extended the losses further last week following soft ADP data
and a Bloomberg report saying that Hassett emerged as the frontrunner for the
Fed Chair position.
The probability for a
December cut is now at 87%, which makes it a done deal. We won’t get much data
before the FOMC meeting, so the focus will likely be mainly on jobless claims
and ADP data, which haven’t been showing any strong improvement.
Weak data should keep
weighing on the greenback, while strong data could provide some short-term reprieve.
At the end of the day though, it’s all about the FOMC decision now and the
following NFP and CPI reports.
On the EUR side, nothing
has changed fundamentally. The ECB policymakers continue to repeat that the
current policy is appropriate and that they won’t respond to small or shot-term
deviations from their 2% target. The recent Eurozone data has been supporting
the central bank neutral stance.
EURUSD Technical
Analysis – Daily Timeframe
On the daily chart, we can
see that EURUSD has been trading in basically a 150-pip range since October as
the lack of key US data releases and no big changes in macro fundamentals
suppressed the volatility.
The price is slowly
approaching the key swing point around the 1.1669 level and that’s where we can
expect the sellers to step in with a defined risk above the level to position
for a drop back into the 1.15 handle. The buyers, on the other hand, will want
to see the price breaking higher to increase the bullish bets into the 1.1728
level next.
EURUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have an upward trendline defining the bullish momentum. We can
expect the buyers to lean on the trendline with a defined risk below it to keep
pushing into new highs. The sellers, on the other hand, will look for a break
lower to pile in for a drop into the 1.15 handle next.
EURUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as the buyers
will have a better risk to reward setup around the trendline, while the sellers
should get more conviction for more downside on a break below the trendline. The
red lines define average daily range for today.
Upcoming
Catalysts
Today we get the Eurozone Flash CPI. Tomorrow, we have the US ADP and the US
ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures. On
Friday, we conclude the week with the University of Michigan Consumer Sentiment
report.
This article was written by Giuseppe Dellamotta at investinglive.com.