Basic overview
The USD is generally weaker after the float US PPI reported yesterday. Market prices now show 31 bps of discounting by the end of the year compared to 24 bps before the PPI. The focus remains on the US CPI report today.
A hot report may cause some trouble in the markets with the stock market looking the most vulnerable at the moment.
That would likely reverse most of the recent moves and trigger a correction in Treasury yields and thus in the US Dollar.
On the EUR side, the latest
Eurozone CPI in line with forecasts although the Core gauge was still very sticky around 2.7%. As a reminder, the
ECB cut the policy rate with 25 bps at the last decision bringing it to 3.00%.
The central bank removed the passage saying “it will keep policy rates sufficiently tight for as long as necessary” meaning that upside risks to inflation have diminished. The market sees a 98% probability of a rate cut at the upcoming meeting and a total of 88 bps of easing by the end of the year.
EURUSD Technical Analysis – Daily Time Chart
EURUSD daily
On the daily chart, we can see that EURUSD is off the lows as the US tax and PPI news weakens the US Dollar in general. From a risk management perspective, sellers will have a better risk to reward position around the main line of motion position for further disadvantage. The buyers, on the other hand, want to see the price break higher to increase the bullish bets to new highs.
EURUSD Technical Analysis – 4 Hours Timeframe
EURUSD 4 hours
On the 4 o'clock table, we can see that we have something important the face zone around the 1.0335 level where the price has been rejected several times in the past weeks. That's where we can expect the sellers to step in with marked risk above the level to position for a drop back to lows. The buyers, on the other hand, want to see the price break higher to increase the bullish bets into the main trend line that aims to break above it.
EURUSD Technical Analysis – 1 hour timeframe
EURUSD 1 hour
On the 1 hour chart, we can see that we have a small uptrend that defines the current bullish trend in this timeframe. It is likely that the buyers will continue to lean forward to position for further upside, while the sellers will look for a break lower to target new levels.
The red lines define the average daily range for today though the price can easily extend beyond these levels as we have the US CPI report ahead of us and it is a key event.
Catalysts to come
Todaywe have the US CPI report, and tomorrow we get the latest US jobless claims numbers.
