Fundamental
Overview
The USD continues to be backed
by good economic data as we have also seen recently from the US PMIs last Friday and the US Consumer Confidence report this week. Yesterday, we
also got the US Jobless Claims figures where the data showed that
the labour market continues to rebalance via less job availability rather than
more layoffs.
Such data keeps the
interest rates expectations stable around two cuts by the end of the year and
supports the risk sentiment amid a pickup in growth without inflationary
pressures.
The EUR, on the other hand,
has been under pressure due to some US Dollar strength this week. It looks like
the price action has been influenced more by month-end, quarter-end and mid
year-end flows rather than something fundamental.
The market participants
should also consider that this weekend we have the first round of the French
elections on the agenda which could lead to a gap on Monday. Therefore, it
shouldn’t be surprising to see some defensive EUR positioning into the weekend
if it happens.
EURUSD Technical
Analysis – Daily Timeframe
EURUSD Daily
On the daily chart, we can
see that EURUSD has been consolidating just beneath the key 1.0727 level. As
the price stays below the level, it skews the bias more to the downside as the
sellers continue to pile in for a drop into the 1.06 handle. The buyers will
want to see the price rallying back above the 1.0727 level to regain some
control and start targeting new highs.
EURUSD Technical Analysis – 4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can
see that we have a strong support around the 1.0680 level where the price got
rejected from several times in the past days. We can also see that the price
has been printing lower highs as the market kept testing the support. This is a
bearish price action and it also formed what looks like a descending triangle.
A breakout to the downside
should see the bearish momentum increasing with the sellers piling in for a
drop into the 1.06 handle. The buyers, on the other hand, will want to see a
breakout to the upside to invalidate the bearish setup and position for a rally
into the 1.08 handle.
EURUSD Technical
Analysis – 1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, we can
see that we have an interesting zone around the 1.07 handle as the price
reacted to it several times. This is acting as kind of a barometer for the
sentiment with the price staying above being more bullish and below being more
bearish. There’s not much else we can glean from this chart as the buyers will
keep on stepping in around support zones and the sellers will lean on the
resistances. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the US PCE report where the market expects
the Core PCE to fall further towards the Fed’s 2% target.