EURUSD Technical Analysis – Key levels in play

US:

• The Fed left interest rates unchanged as
  expected.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The US CPI last
  week came in line with expectations, so the market’s pricing remained roughly
  the same.
• The labour market
  displayed signs of softening although it remains fairly solid.
• The market sees basically a 50/50 chance of a hike
  in November.

EU:

• The ECB hiked by 25 bps at the
  last meeting and added a line in the statement that hinted to the end of the
  tightening cycle.
• President Lagarde didn’t push back against the idea
  of them having reached already the terminal rate and highlighted the slowdown
  in Eurozone economy.
• Inflation measures
  did soften a bit lately but remain uncomfortably high.
• The labour market remains
  very tight with the unemployment rate hovering at record low levels.
• Overall, the economic data lately has been showing
  signs of fast deterioration in the
  economy pointing to a possible recession in the near future.
• The market doesn’t expect the ECB to hike anymore.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that EURUSD has sold
off into the 1.0635 support again
following the FOMC meeting. There are strong buyers at this support as we keep
seeing strong rejections. In fact, we can expect the buyers to pile in with a
defined risk below the level to target the downward trendline and
eventually a breakout. The sellers, on the other hand, will want to see the
price to break through the support with conviction to position for a selloff
into the 1.05 handle.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might see a pullback into the downward trendline
where we have also the 38.2% Fibonacci retracement level
for confluence. The
sellers are likely to lean on the trendline with a defined risk above it to
target a break below the support. The buyers will need the price to break above
the trendline and the 1.0770 level to change the market structure from bearish
to bullish.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor resistance around the 1.0670 level as we have the confluence with
the red 21 moving average, the
previous support turned
resistance and the 38.2% Fibonacci retracement
level. This is where we can expect some sellers to start piling in with a
defined risk above the resistance. If the price breaks through this resistance,
then the buyers will target the trendline with more conviction.

Upcoming Events

The week is drawing to a
close, but we still have a couple of key economic releases ahead. Today, the main event will be the US Jobless Claims
report as the labour market data remains very important for the Fed and the
market. Tomorrow, we will see the latest Eurozone and US PMIs data which is
expected to be market moving.