Basic overview
The USD continues to consolidate around the high levels except against commodity currencies where it has been gaining the upper hand. Last week's US inflation data was disappointing again although the data that feeds into the Core PCE overall was mixed as forecasters of the expected to increase 0.13% M / M.
Nevertheless, the Financial Results continue to climb and are now back around their post-US election highs. There is some understandable uneasiness in the bond market with the hot US data and the Fed continuing to cut into an accelerating economy.
On the EUR side, the ECB
cut interest rates by 25 bps as expected. The central bank removed the line saying it would keep policy rates tight enough for as long as necessary which the market took as a sign they are no longer in a tight zone and can reduce the pace of rate cuts while as they approach the neutral level.
EURUSD Technical Analysis – Daily Time Chart
On the daily chart, we can see that EURUSD continues to consolidate between the 1.0610 the face and the 1.0450 support. From a risk management perspective, sellers will have a better risk to reward position around the line of motion conditions for a drop in new levels. The buyers, on the other hand, will want to see a break above the trend line to increase the bullish bets into the 1.09 handle next.
EURUSD Technical Analysis – 4 Hours Timeframe
On the 4 hour chart, we can see more clearly the price action of a range that has been going on for a month as the market reached the highest level in the repayment of rate cuts for the Fed . We have an interesting area around the 1.0550 level which has been acting as a kind of barometer with the price above more stable and below that more bearish. Overall, we continue to trade in this 150-pips range and will likely need a strong move to get out of it.
EURUSD Technical Analysis – 1 hour timeframe
On the 1 hour chart, there is not much else we can add here and the buyers will want to see the price break above the 1.0550 zone to target a break above the trend line, while' the sellers will look for a break below the 1.0450 support to pile in for new levels. The red lines define the average daily range for today.
Catalysts to come
Todaywe get US Retail Sales data. Tomorrow, we have the FOMC Policy Decision. On Thursday, we will get the latest US jobless claims numbers. On Friday, we finish the week with US PCE data.