Last
week, the US CPI came
basically in line with expectations, but the good news is that the Core M/M
reading once again printed at 0.2%. The less good news is that the US Initial Claims spiked
higher, but Continuing Claims remained solid. We have already seen Claims
spiking higher in the past months, so it shouldn’t be worrying yet. The
long-term inflation expectations in the University of Michigan report
ticked lower, so on the data side the soft-landing narrative was supported. The
US Dollar, nonetheless, appreciated across the board as the attention may have
turned already on the next data given the higher energy prices and China starting to stimulate more.
The ECB, on the other hand, hiked by 25 bps and
changed a line in the statement that leant more on the dovish side. President
Lagarde didn’t hint to what we can expect next and, in line with the Fed, just
reaffirmed their data dependency and kept all the options on the table. The
data for the Eurozone has been consistently missing expectations, but the
recent inflation and employment reports
remained strong justifying another rate hike in September all else being equal.
EURUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that EURUSD has
broken all the key support levels
and extended the fall into the 1.08 territory. The next big level will be the
swing low at 1.0832 where we can expect the buyers to step in and target the
1.1033 resistance. The bias remains bearish as the moving averages have
crossed to the downside and the price keeps printing lower lows and lower
highs.
EURUSD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the bearish
momentum is weakening as we are starting to see a divergence with the
MACD. This is
generally a sign that a pullback or reversal may be due. If the price breaks
above the resistance zone around the 1.0940, then we can expect an extension to
the 1.1033 level.
EURUSD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that the
resistance zone around the 1.0940 has the confluence with
the 61.8% Fibonacci
retracement level and the previous swing support turned
resistance. The sellers are likely to pile in here
with a defined risk above the zone to target the 1.0832 level. The buyers, on
the other hand, will want to see the price breaking higher to pile in and
target the 1.1033 resistance.
Upcoming Events
This week is a
bit empty on the data front. Today we will see the latest US Retail Sales
report where the USD is likely to appreciate in case of a beat and pull back in
case of a miss. The US Jobless Claims on Thursday is likely to be the main
event of the week as another big miss may cause recessionary fears and send the
market into risk off, while strong data should keep the USD strong as any
dovish bet should be put aside.
See also the video below:
This article was written by FL Contributors at www.forexlive.com. Source