EURUSD Technical Analysis – Focus on the US CPI report
Fundamental OverviewThe USD is weaker across the board following the soft US PPI report yesterday. The market pricing is now showing a total of 31 bps of easing by year end compared to 24 bps before the PPI. The focus remains on the US CPI report today. A hot report will likely cause some trouble in the markets with the stock market looking as the most vulnerable right now.The best outcome would be a soft report given the overstretched moves in the markets caused by the repricing in rate cuts expectations. That would likely reverse most of the recent trends and trigger a correction in Treasury yields and therefore in the US Dollar. On the EUR side, the latest Eurozone CPI came in line with forecasts although the Core measure remained pretty sticky around 2.7%. As a reminder, the ECB cut the policy rate by 25 bps at the last decision bringing it to 3.00%. The central bank removed the passage saying that “it will keep policy rates sufficiently restrictive for as long as necessary” implying that upside inflation risks have faded. The market sees a 98% probability of a rate cut at the upcoming meeting and a total of 88 bps of easing by year end.EURUSD Technical Analysis – Daily TimeframeOn the daily chart, we can see that EURUSD is off from the lows as the tariffs news and the US PPI weakened the US Dollar across the board. From a risk management perspective, the sellers will have a better risk to reward setup around the major trendline to position for further downside. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs.EURUSD Technical Analysis – 4 hour TimeframeOn the 4 hour chart, we can see that we have an important resistance zone around the 1.0335 level where the price got rejected from several times in the past weeks. That’s where we can expect the sellers to step in with a defined risk above the level to position for a drop back into the lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the major trendline targeting a break above it.EURUSD Technical Analysis – 1 hour TimeframeOn the 1 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum on this timeframe. The buyers will likely keep on leaning on it to position for further upside, while the sellers will look for a break lower to target new lows. The red lines define the average daily range for today although the price can easily extend beyond those levels given that we have the US CPI report ahead and it’s a key event.Upcoming CatalystsToday, we have the US CPI report, while tomorrow we get the latest US Jobless Claims figures. This article was written by Giuseppe Dellamotta at www.forexlive.com.
Fundamental Overview
The USD is weaker across the board following the soft US PPI report yesterday. The market pricing is now showing a total of 31 bps of easing by year end compared to 24 bps before the PPI. The focus remains on the US CPI report today.
A hot report will likely cause some trouble in the markets with the stock market looking as the most vulnerable right now.The best outcome would be a soft report given the overstretched moves in the markets caused by the repricing in rate cuts expectations.
That would likely reverse most of the recent trends and trigger a correction in Treasury yields and therefore in the US Dollar.
On the EUR side, the latest Eurozone CPI came in line with forecasts although the Core measure remained pretty sticky around 2.7%. As a reminder, the ECB cut the policy rate by 25 bps at the last decision bringing it to 3.00%.
The central bank removed the passage saying that “it will keep policy rates sufficiently restrictive for as long as necessary” implying that upside inflation risks have faded. The market sees a 98% probability of a rate cut at the upcoming meeting and a total of 88 bps of easing by year end.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD is off from the lows as the tariffs news and the US PPI weakened the US Dollar across the board. From a risk management perspective, the sellers will have a better risk to reward setup around the major trendline to position for further downside. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have an important resistance zone around the 1.0335 level where the price got rejected from several times in the past weeks. That’s where we can expect the sellers to step in with a defined risk above the level to position for a drop back into the lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the major trendline targeting a break above it.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum on this timeframe. The buyers will likely keep on leaning on it to position for further upside, while the sellers will look for a break lower to target new lows.
The red lines define the average daily range for today although the price can easily extend beyond those levels given that we have the US CPI report ahead and it’s a key event.
Upcoming Catalysts
Today, we have the US CPI report, while tomorrow we get the latest US Jobless Claims figures. This article was written by Giuseppe Dellamotta at www.forexlive.com.
