EURUSD Technical Analysis – These levels will be key for the next direction


  • The Fed left interest rates unchanged as
    expected at the last meeting.
  • 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 Core PCE
    in line with expectations with disinflation continuing steady.
  • The labour market
    displayed signs of softening although it remains fairly solid as seen also last
    week with a strong beat in Jobless Claims and this
    week with the beat in Job Openings.
  • The ISM Manufacturing PMI beat
    expectations while the ISM Services PMI came in
    line with forecasts in another sign that the US economy remains resilient.
  • The miss in the ADP report
    yesterday led to some USD weakness which might continue if the data in the next
    couple of days misses as well.
  • 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.
  • The Eurozone CPI missed
    across the board last week 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
has pulled back recently with the miss in the ADP report yesterday giving it a
bit of relief after a series of strong US data. From a risk management
perspective, the sellers would have a much better risk to reward setup shorting
from the resistance around
the 1.0620 level where we have the confluence with the
trendline, the
38.2% Fibonacci retracement level
and the red 21 moving average. The
buyers, on the other hand, will need the price to break above the trendline to
change the trend around.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a divergence with the
MACD right
around the key 1.05 support. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, we might see a pullback
into the previously mentioned 1.0620 resistance zone, so the buyers are likely
to pile around here to position for a rally into the resistance.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
market structure on this timeframe is bullish as the price has made a new
higher high and the moving averages have crossed to the upside. The buyers
should lean on the support around the 1.0495 level with a defined risk below it
to target the 1.0620 level. More conservative buyers may want to wait for the
price to break above the recent high at 1.0532 before joining the rally. The
sellers, on the other hand, will want to see the price breaking below the
1.0495 support to pile in again and extend the drop to new lows.

Upcoming Events

Today we have the Jobless Claims report, which
continues to show a solid labour market and given the reaction to the miss in
the ADP yesterday, we can expect a rally in case of a miss and a drop in case
of a beat. Tomorrow, it will be the time for the NFP report which is the only
one the Fed will see before its next rate decision.

This article was written by FL Contributors at Source