EURUSD Technical Analysis | Forexlive

The miss in the US CPI report
last week triggered a heave US Dollar selling across the board. The market
started to price out the more hawkish expectations and sees the July hike as
the last one for this cycle. Moreover, the resilient labour market and the
rising consumer sentiment point to
a soft-landing scenario where inflation comes down to target without affecting
too much economic growth. This has led to a positive risk sentiment and the USD
weakened.

The ECB has already committed to a rate hike in
July, so even if the data disappoints going forward, it’s more likely to affect
the September decision rather than the July one. In fact, the ECB members keep
repeating that the September hike is more uncertain, and it will depend on the
data.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that EURUSD has been
rallying strongly for over a week now with almost no pullbacks. The price has
even broken out of the upper bound of the rising wedge pattern,
which is generally a sign that the momentum is so strong that it’s more likely
that the price will continue in that direction even after a pullback. The price
is also overstretched now as depicted by the distance from the blue 8 moving average.
Generally, we can see some consolidation or a pullback into the moving average
before another major move.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that after breaking
out of the descending triangle pattern, the price just kept on rallying with
shallow pullbacks into the blue 8 moving average. This is a sign of strong
momentum and the recent consolidation at the highs indicates that this momentum
is weakening. We may see some more consolidation or a pullback from here.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that
EURUSD has been in a tight range since last Friday. The buyers may lean already
against the blue trendline with a
defined risk below it and target new higher highs. The sellers, on the other
hand, can only wait for the price to fall below the upper bound of the rising
wedge to confirm a fakeout and pile in to extend an eventual selloff into the
lower bound of the wedge.

Upcoming Events

Today we have the US
Retail Sales on the agenda, followed by US Jobless Claims on Thursday. Given
the current sentiment, good data should be just an opportunity to buy the dip
while bad data should increase the US Dollar selling. It’s likely that only
very ugly figures can spook the market and lead to a broad USD buying as a safe
haven.