Fundamental
Overview
The USD was sold across the
board on Wednesday following the soft US CPI report. The data made the market to price back
in two cuts for this year. Later in the day though we got a bit more hawkish
than expected FOMC decision where the dot plot showed that the Fed sees just one cut for this
year despite the soft US CPI report.
This gave the greenback a
boost although Fed Chair Powell backpedalled on the projections making them a
bit less worrying as the central bank remains very data dependent. Moreover,
the US Dollar found further support yesterday as the market went into risk-off
mode for unclear reasons.
The EUR, on the other hand,
got hit hard by the European elections as the political uncertainty weighed
on the sentiment and led to some increase in bonds risk premia and selloff in
European stocks.
EURUSD Technical
Analysis – Daily Timeframe
EURUSD Daily
On the daily chart, we can
see that EURUSD broke through the key 1.0727 support
zone today and increased the bearish momentum as the sellers piled in more
aggressively. The target should be around the 1.06 handle. A break below the
1.06 handle would open the door for a drop into the key 1.05 level which is
basically the bottom of the range since late 2022.
EURUSD Technical
Analysis – 4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can
see more clearly the break of the support where we had also the 61.8% Fibonacci
retracement level for confluence.
From a risk management perspective, late sellers might want to wait for a
pullback into the 1.08 support-turned-resistance
to position for a continuation of the downtrend into the 1.06 handle with a
better risk to reward setup.
The buyers, on the other
hand, will want to see the price rally back above the 1.08 resistance to gain
more control and start targeting the 1.09 level next.
EURUSD Technical
Analysis – 1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, we can
see that the pair is near the lower level of the average
daily range. That’s where we might see a bounce as the price generally
doesn’t extend beyond the levels without a strong catalyst.
Upcoming
Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment
survey where the data is expected to show an increase to 72.0 vs. 69.1 prior.