Fundamental
Overview
The USD came back with a vengeance
last Friday following the strong US NFP report where the data surprised with solid
job and wage growth. There were also negatives like the uptick in the unemployment
rate, but all in all, we can say that it was a good report.
The data triggered a
hawkish repricing in interest rates expectations with the market now expecting
once again just one cut by the end of the year. It’s not a big deal in the bigger
picture, but for now the sentiment is bullish for the greenback and we will
likely need a catalyst to change it again.
The EUR, on the other hand,
has been gaining ground against the USD mainly because of the Dollar weakness amid
the general risk-on sentiment regime due to the pickup in global growth.
This sentiment has been
changed by the NFP data and the European elections over the weekend where we
got some governments like France calling snap elections which added even more
pressure on the single currency due to political uncertainty.
All eyes will now be on the
US CPI and FOMC decision on Wednesday as that day can turn the sentiment around
or exacerbate it further.
EURUSD Technical
Analysis – Daily Timeframe
On the daily chart, we can
see that EURUSD sold off following the strong US NFP report and broke the 1.08 support. The breakout of the range gave the sellers
more control with the first target now standing around the 1.0727 level.
That’s where we can expect the
buyers to step in with a defined risk below the level to position for a rally
into new highs with a better risk to reward setup.
EURUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the breakout of the range. We can see that we have also the
61.8% Fibonacci
retracement level of the entire rally from the 1.06 region standing around
the 1.0727 level. This looks like an important level for market participants.
The buyers will want to see
a bounce, while the sellers will want to see a break to extend the downtrend
back into the 1.06 region.
EURUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that from a risk management perspective, the sellers will be better off
waiting for a pullback into the 1.08 resistance where we can also find the
38.2% Fibonacci retracement level for confluence.
The red lines show the average daily range for today, so in case the price reaches one of the two zones, the
market participants will have defined levels where to protect their stops.
Upcoming
Catalysts
This week is a bit empty on the data front although we will
have the biggest market moving events on Wednesday when we get the US CPI data
and the FOMC rate decision. On Thursday, we have the US PPI and the latest US
Jobless Claims figures. On Friday, we conclude the week with the University of
Michigan Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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