FUNDAMENTAL
OVERVIEW
USD:
The US Dollar weakened
across the board yesterday following the soft US core inflation data but the initial moves were
eventually faded and the greenback gained. It’s hard to explain such a price
action but we got also renewed Trump’s threats against Iran following the US
CPI report which weighed on the risk sentiment and could have been the reason
for the comeback.
In terms of market pricing,
traders firmed up bets on Fed rate cuts with the total easing by year-end
increasing to 54 bps from 52 bps before the CPI release. Fed members continue
to support the current patient and data-dependent stance. The outlook for the
USD remains neutral/bearish for now.
Today, the focus will be on
a potential US Supreme Court decision on Trump’s tariffs. If tariffs get struck
down, we might see general risk on sentiment as initial reaction and that could
weigh on the US Dollar in the short-term. On the other hand, if tariffs are
kept in place, it shouldn’t change much given that the market got already used
to tariffs.
EUR:
On the EUR side, the ECB remains
in a neutral stance reaffirming its data-dependent and meeting-by-meeting
approach to policy decisions. ECB members continue to repeat that the current
policy is appropriate, and they won’t respond to small or short-term deviations
from their 2% target. The data has been supporting the central bank’s neutral
stance, with inflation data recently surprising to the downside.
EURUSD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that EURUSD rallied into the key 1.17 resistance after the DOJ subpoena
news but eventually erased all the gains as the sellers piled in to position
for new lows. The price remains confined
between the 1.1615 level and the trendline. The sellers will likely continue to
lean on the trendline to keep pushing into new lows, while the buyers will look
for a break higher to open the door for a move into the 1.18 handle next.
EURUSD TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, there’s
not much we can glean from this timeframe given that the only key technical
levels remain the trendline and the 1.1615 level. We need to zoom in to see
some more details.
EURUSD TECHNICAL ANALYSIS –
1 HOUR TIMEFRAME
On the 1 hour chart, we can see that we have a minor downward trendline
defining the current bearish momentum. The sellers will likely lean on the
trendline with a defined risk above it to position for a drop into new lows,
while the buyers will look for a break higher to pile in for a rally into the major
trendline targeting a breakout. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the November US Retail Sales and US PPI reports, so it’s going
to be old data. The market will likely focus on the potential US Supreme Court
decision on Trump’s tariffs. Tomorrow, we get the latest US Jobless Claims
figures.
This article was written by Giuseppe Dellamotta at investinglive.com.