EUR/USD Technical Analysis | Forexlive
On the daily chart below, we can
see that since last Wednesday, the USD kept depreciating every single day. The
first catalyst was a miss in Jobless
Claims on Thursday which made Treasury yields to fall and the US Dollar to
weaken.
The second catalyst was on Friday
with the NFP
report where the headline beat estimates, but the unemployment rate rose more
than expected and average hourly earnings increased less than expected.
That same day though, the Silicon
Valley Bank failed and yields started to plummet as the market
started to price a less aggressive Fed. In fact, yesterday the 2 year Treasury
yields fell the most since the stock market crash in 1987.
This weighed on the US Dollar and
the other currencies benefited. We can see that the price has now stalled at
the 1.07 resistance zone and the moving
averages are starting to cross to the upside, which may be a bad omen for the
sellers.
On the 4 hour chart below, we can
see that the sellers are leaning on that resistance zone near the 1.07 handle
with the 38.2% Fibonacci
retracement level of the entire move down since the beginning
of February.
The last line of defence for the
sellers is the 1.08 handle where we can also find the 50% Fibonacci retracement
level. Today we have the US CPI report which at
this point may decide if the Fed hikes by only 25 bps or even
pause its tightening cycle. A beat should nonetheless be positive for the USD,
and a miss should be negative.
On the 1 hour chart below, we can
see that a divergence between the price and the MACD has formed right at the
resistance. The market may pull back to the 38.2 or 50% Fibonacci retracement
level before the buyers start to step in to push the price above the 1.07
resistance.
This pullback would be a long
covering before the CPI report and may not be a signal that the market is
reversing. The CPI is what will probably decide where the market goes next.