Fundamental
Overview
The USD got a boost from the
strong US
Consumer Confidence data which triggered an aggressive rise in long term Treasury
yields. The report however just showed that the labour market remains resilient
which is good news for growth and not necessarily bad news for inflation. The
greenback benefited also from the risk-off sentiment which seems to be caused
more by the month-end flows rather than a fundamental driver.
The EUR, on the other hand,
has been gaining ground against the USD mainly because of the Dollar weakness
and the risk-on sentiment. Moreover, the recent data from the Eurozone has been
generally good with a pickup in the PMIs and high wage growth which led to the
market scaling back a bit the rate cuts expectations. If we go back into
risk-on sentiment, the greenback could start losing ground against the Euro
again.
EURUSD Technical
Analysis – Daily Timeframe
On the daily chart, we can
see that EURUSD couldn’t break above the key 1.09 handle and sold off into the
1.08 level following the US data and the risk-off sentiment. The price is now
trading a bit below the 1.08 handle which technically opened the door for a
drop into the 1.0727 level next.
The sellers will likely look
for an entry around this level to position for a continuation of the drop with
a good risk to reward setup. The buyers, on the other hand, will want to see some
key breaks on the lower timeframes to indicate a change in the momentum.
EURUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the price pulled back into the recent support-turned-resistance
around the 1.0812 level. This is where we can expect the first rejection with
the sellers stepping in with a defined risk above the level to position for the
drop into the 1.0727 support.
The buyers, on the other
hand, will want to see the price breaking higher to invalidate the bearish
setup and position for a rally back into the 1.09 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have a good resistance zone at the 1.0812 level where we can find
the confluence
of the downward trendline
and the 38.2% Fibonacci
retracement level.
This is where the sellers
will likely step in with a defined risk above the trendline to target the
1.0727 support next. The buyers, on the other hand, will want to see the price
breaking above the trendline to invalidate the bearish setup and start
targeting the 1.09 resistance.
Upcoming
Catalysts
Today we will see the Eurozone Unemployment Rate and the latest US Jobless
Claims figures. Tomorrow, we conclude the week with the Eurozone Flash CPI and
the US PCE reports.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com. Source