EURUSD Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as expected
  at the last meeting with basically no change to the statement.
• Fed Chair Powell stressed once again that they are
  proceeding carefully as the full effects of policy tightening have yet to be
  felt.
• The US Core PCE yesterday came in line
  with forecasts with the disinflationary progress continuing steady.
• The labour market is starting to show weakness as Continuing
  Claims are now rising at a fast pace and the recent NFP report missed across
  the board.
• The latest US PMIs came basically in line
  with expectations with a miss in the Manufacturing index and a beat in the
  Services measure.
• The US Consumer Confidence this week beat
  expectations although the details about the labour market continued to weaken.
• The hawkish Fed members recently shifted
  their stance to a more neutral position.
• The market doesn’t expect the Fed to hike anymore.

EUR

• The ECB left interest rates unchanged as expected
  as the central bank has ended its tightening cycle.
• President Lagarde highlighted the weakness in the
  Eurozone economy and reaffirmed that rates will make a substantial contribution
  to curbing inflation.
• The Eurozone CPI yesterday missed
  expectations across the board as the progress on the inflation front continues
  steady.
• The labour market remains historically tight with
  the unemployment rate remaining unchanged at 6.5%.
• The recent Eurozone PMIs missed across the board as
  the economy continues to struggle.
• The ECB members continue to repeat that they will
  keep rates steady as long as necessary to get inflation back to target.
• The market doesn’t expect the ECB to hike anymore.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that EURUSD probed
above the key resistance around the 1.0950 but sold off soon after from the
1.10 handle. This is where the sellers are piling in with a defined risk above
the resistance to position for a drop into new lows. The buyers, on the other
hand, will want to see the price continuing higher and break decisively the
resistance zone to start targeting the cycle high at 1.1275.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4
hour chart, we can see that we had a strong divergence with the MACD right into
the key resistance. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, it was a signal for the
sellers that the price could start to reverse soon. The first target should be
the base of the divergent formation around the 1.0830 level where we can also
find the 38.2% Fibonacci retracement level for confluence. The buyers, on the
other hand, will likely lean on that support zone to position for a rally into
new highs.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that
there’s not much to do now other than just waiting for the drop into the
support zone. In case we see a pullback here, the sellers are likely to lean on
the downward trendline around the 1.0930 level and keep targeting the 1.0830
support zone with a further break lower likely triggering a selloff into the
1.0650 level. Alternatively, the sellers could also increase their bearish bets
into the support if the price breaks below the recent low at 1.0880 but the
risk to reward would be worse.

Upcoming Events

Today, the main event will
be the release of the US ISM Manufacturing PMI which missed expectations by a
big margin the last time. A strong report is likely to give another boost to
the US Dollar while weak figures could weigh on the greenback in the short term.