EURUSD Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as expected with a shift in the statement that
  indicated the end of the tightening cycle.
• The Summary of Economic Projections showed a
  downward revision to Growth and Core PCE in 2024 while the Unemployment Rate
  was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts
  in 2024 compared to just two in the last projection.
• Fed Chair Powell didn’t push back against the strong dovish pricing
  and even said that they are focused on not making the mistake of holding rates
  high for too long, which implies a rate cut coming soon.
• The US CPI last week came in line with expectations
  with the disinflationary progress continuing steady. This was also confirmed by
  the US PPI the day after where the data missed
  estimates.
• The labour market has been showing signs of
  weakening lately but we got some strong releases recently with the US Jobless Claims and the NFP coming
  in strongly.
• The US Retail Sales last week beat expectations across the board as
  consumer spending continues to hold.
• The latest ISM Manufacturing PMI missed expectations falling further into
  contraction, while the ISM Services PMI beat forecasts holding on in expansion.
• The market expects the Fed to start cutting rates
  in Q1 2024.

EUR

• The ECB left interest rates unchanged as
  expected maintaining the usual data dependent language.
• President Lagarde highlighted
  once again that the risks to the economy are skewed to the downside and that
  they did not discuss rate cuts, which was a pushback against the aggressive
  market’s rate cut pricing.
• The recent Eurozone CPI missed
  expectations across the board, further reaffirming that the ECB is done for the
  cycle with rate cuts likely coming soon.
• The labour market remains historically
  tight with the unemployment rate hovering at cycle lows.
• The Eurozone PMIs missed
  expectations across the board with both the Manufacturing and Services sectors
  falling further into contraction.
• The ECB members continue to repeat that they will
  keep rates high for as long as necessary and that the market’s expectations are
  too aggressive.
• The market expects the ECB to start cutting rates in
  Q1 2024.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that EURUSD bounced
on the 50% Fibonacci retracement level of
the entire rally from the October lows and surged into the 1.10 handle
following the surprisingly dovish FOMC decision and the less dovish than
expected ECB announcement. The resistance formed
by the 1.10 handle and the 61.8% Fibonacci retracement level of the entire fall
since the 1.13 level continues to be a tough nut to crack for the buyers.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair
reversed some of the gains last Friday. The buyers leant on the red 21 moving average where
they had the confluence with the
38.2% Fibonacci retracement level and the 1.09 handle. The price is now
consolidating as the market awaits some catalyst to push it in either direction
but given that we are now basically in the Christmas period, the pair might
just keep on ranging around these levels.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been trading inside an ascending triangle. The
price broke to the upside of the pattern and what follows is generally a
sustained move in the direction of the breakout. The buyers are likely to keep piling
in to target a rally into the 1.10 handle. The sellers, on the other hand, will
want to see the price reversing and breaking below the minor trendline of the triangle
to position for another bearish impulse.

Upcoming Events

This week is a bit empty on the data front as we head
into the Christmas holidays. On Wednesday, we have the US Consumer Confidence
report. On Thursday, we get the latest US Jobless Claims data, while on Friday
we conclude the week with the US PCE report.