Fundamental
Overview
Yesterday, the USD
weakened across the board following a benign US
CPI report where the data came in line with expectations. The market firmed
up the rate cuts expectations with September and December now fully priced in. We
saw a general risk-on sentiment as a result and barring negative surprises in
the following days and weeks, this trend might have some more legs.
On the EUR side,
nothing has changed. The ECB speakers continue to confirm the first rate cut in
June but don’t over-commit on the timing for the following rate cuts. The
market expects three rate cuts this year, which is in line with the ECB members’
comments.
EURUSD Technical
Analysis – Daily Timeframe
On the daily
chart, we can see that EURUSD yesterday surged into the 1.09 handle following
the US CPI report. We are now seeing a rejection from the key swing level,
which is totally normal after such a strong rally. The trend remains firmly
bullish as the price keeps on printing higher highs and higher lows. The
sellers will need the price to fall below the 1.0727 level to invalidate the
bullish case and take back control.
EURUSD
Technical Analysis – 1 hour Timeframe
On the 1 hour
chart, we can see more closely the rejection from the 1.09 handle. From a risk
management perspective, the buyers will have a much better risk to reward setup
around the 1.0820 level where they will find the confluence
of the trendline
and the 61.8% Fibonacci
retracement level.
If the positive
sentiment were to continue though and the price were to break above the 1.09
handle before pulling back to the support
zone, the buyers will likely pile in anyway to target an extension into the
1.10 handle.
Upcoming
Catalysts
Today the US Jobless Claims figures will take the centre
stage as the market will want to see if the last week’s numbers were the start
of a trend or just a blip.
See the video below
This article was written by Giuseppe Dellamotta at www.forexlive.com. Source