EURUSD Technical Analysis – Key level in sight


  • The Fed left interest rates unchanged as
  • 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
  • The latest US CPI came
    in line with expectations, so the market’s pricing remained roughly the same.
  • 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 market doesn’t expect the Fed to hike again at
    the moment.


  • 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

On the daily chart, we can see that the EURUSD pair
remains in a strong downtrend with the price printing lower lows and lower
highs and the moving averages crossed
to the downside acting as dynamic resistance. The pair last week broke below
the key swing level at 1.0635 opening the door for a fall into the 1.05 handle.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we are likely to see a pullback into the previous support now turned resistance which
might turn into a classic “break and retest” pattern. We can also see that we
have the confluence with the
38.2% Fibonacci retracement level
and the red 21 moving average. This is where the sellers are likely to pile in
with a defined risk above the resistance to target the 1.05 handle.

EURUSD Technical Analysis –
1 hour Timeframe

On the
1 hour chart, we can see more closely the bearish setup with the downward trendline adding
further confluence to the resistance zone around the 1.0615 level. The buyers
will want to see the price breaking above the resistance zone to invalidate the
bearish setup and position for a rally into the major trendline around the
1.0720 level.

Upcoming Events

Today we will see the latest US Consumer Confidence
report which surprised to the downside the last time and weighed on the USD in
the short term as Treasury yields fell. On Thursday, we will have another US
Jobless Claims data which keeps on showing strength in the labour market
maintaining the hawkish pricing in interest rates expectations. Finally, on
Friday, we will get the latest Eurozone CPI data and the US PCE report.

This article was written by FL Contributors at Source