EURUSD Technical Analysis – New lows incoming?


  • The Fed left interest rates unchanged as expected at the last meeting.
  • The macroeconomic projections were revised higher,
    and the Dot Plot showed that the FOMC still expects another rate hike by the
    end of the year with less rate cuts projected in 2024.
  • Fed Chair Powell reaffirmed their data dependency but added that
    they will proceed carefully.
  • The US CPI last week beat expectations on the
    headline figures, but the core measures came in line with forecasts and the
    market’s pricing barely changed.
  • The labour market remains fairly solid as seen once again last week
    with the beat in Jobless Claims, although continuing claims surprisingly missed.
  • The US PMIs
    recently showed that the US economy remains pretty resilient.
  • The University of Michigan Consumer Sentiment report last Friday missed across the
    board with the inflation expectations figures spiking back up.
  • The Fed members continue to cite elevated long-term
    yields as a reason to proceed carefully and will likely pause in November as
  • The market doesn’t expect the Fed to hike anymore.


  • The ECB hiked by 25 bps at the
    last meeting and added a line in the statement that signalled 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.
  • The Eurozone CPI recently
    missed across the board supporting the ECB’s stance.
  • 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.
  • Most ECB members are 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
got rejected perfectly from the key resistance around
the 1.0620 level where we had the confluence with the
trendline and the
38.2% Fibonacci retracement level.
The sellers stepped in with a defined risk above the trendline to position for
a break below the 1.05 support and target the 1.02 handle next. Yesterday, we
got a bounce from the support level, and we will likely see some late sellers
trying to join the trend on this pullback.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the last leg
lower into the 1.05 support diverged with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we got the pullback into the trendline where the
downtrend has likely resumed. The price is now getting rejected from the red 21
moving average as the
sellers are starting to pile in with a defined risk above the last swing high
to position for a drop into new lows. The buyers, on the other hand, will need
the price to break above the trendline to switch the bias from bearish to
bullish and start targeting new higher highs.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
got another divergence recently which led to a pullback into the swing high
around the 1.0550 level. The sellers leant on the resistance with a tight risk
above the level and a great risk to reward setup. The break below the
counter-trendline should be a confirmation that the bearish momentum is strong
and more sellers are likely to pile in to target new lows.

The buyers, on the other hand, will want
to see the price reversing and break above the resistance zone to invalidate
the bearish setup and target the break above the trendline. Alternatively, we
can expect the buyers to step in around the 1.05 support to try another rally
from the lows with a great risk to reward setup.

Upcoming Events

Today we will get the US Retail Sales data and it
will be interesting to see if consumer spending has weakened or it’s still
holding on. On Thursday, we will get the US Jobless Claims report and we will
also hear from Fed Chair Powell with the market focused on any hint about the
near term policy outlook.

See the video below

This article was written by FL Contributors at Source