Fundamental
Overview
Last week, despite the
higher-than-expected inflation figures and a less dovish Powell, the US Dollar
couldn’t extend the gains. The market’s pricing remained largely unchanged at
three rate cuts by the end of 2025.
This might be a signal that
the market is now fine with the current pricing, and we will need stronger
reasons to price out the remaining rate cuts. This could open the door for some
pullbacks and general US Dollar weakness.
On the EUR side, not much
has changed although the probabilities for a 50 bps cut in December fell to 24%
from 31% last week and a total of 139 bps of easing by the end of 2025. This
could turn out to be too much if the data picks up with the Eurozone Flash PMIs
on Friday in focus.
EURUSD Technical
Analysis – Daily Timeframe
EURUSD Daily
On the daily chart, we can
see that EURUSD bounced from the key support zone around the 1.05 handle. That’s where the
buyers stepped in with a defined risk below the level to position for a rally
back into the major trendline.
The sellers, on the other
hand, will want to see the price breaking lower to increase the bearish bets
into new lows or wait for the price to reach the trendline to push into new
lows with an even better risk to reward setup.
EURUSD Technical
Analysis – 4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can
see that the price recently broke above the downward trendline that was
defining the bearish momentum on this timeframe. This might be a signal for a
bigger pullback. The buyers will want to see the price breaking above the 1.0682
level to increase the bullish bets into the trendline, while the sellers will
likely lean on it to target the break below the 1.05 handle.
EURUSD Technical
Analysis – 1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, we can
see that we have a minor resistance zone around the 1.06 handle. This is where
the sellers keep on stepping in to target the break below the 1.05 handle. The
buyers, on the other hand, will need the price to break higher to start targeting
new highs. The red lines define the average daily range for today.
Upcoming
Catalysts
This
week is pretty empty on the data front with the most important releases
scheduled for the latter part of the week. On Thursday, we get the latest US
Jobless Claims figures, while on Friday we conclude the week with the Eurozone
and US Flash PMIs.