Economic OverviewEconomic Overview The US dollar remains supported by strong economic data, including recent positive US PMIs and Consumer Confidence reports. This data bolsters interest rate expectations, with the possibility of two rate cuts by the end of the year. However, if growth accelerates, it could become a headwind for the dollar. Conversely, the Euro has been pressured by the strengthening US dollar and technical factors, such as month-end and quarter-end flows. Technical Analysis Daily Time Frame * EURUSD is trading below 1.0727, indicating a bearish bias towards the 1.06 handle. * Buyers aim to regain control above 1.0727. 4 Hour Time Frame * Strong support exists around 1.0680, with price bouncing off it multiple times. * A descending triangle pattern has formed, suggesting a potential downside breakout. * Sellers target 1.06 handle while buyers seek a breakout above 1.08. 1 Hour Time Frame * Resistance is present around 1.07, with price reacting to it several times. * A break above 1.07 could lead to a rally towards 1.0727. * Sellers may use 1.07 as a support level for a potential break below 1.0670. Upcoming Catalysts * Today: US Jobless Claims * Tomorrow: US PCE report
Basic overview
The USD continues to be supported by good economic data, as we recently saw from last Friday’s US PMIs and this week’s US Consumer Confidence report. While such data keeps interest rate expectations stable around two cuts by year-end, it should also support risk sentiment as growth picks up. This could be a headwind for the dollar.
The EUR, on the other hand, was under pressure this week due to the somewhat stronger US dollar. It appears that the price action is influenced more by month-end, quarter and half-year flows than anything fundamental. Yesterday we also had a major breakout in USDJPY and flows there could have spilled over into other major pairs.
EURUSD technical analysis – daily time frame
EURUSD Daily
On the daily chart we can see that EURUSD is just below the key level of 1.0727. As the price stays below the level, the bias shifts more to the downside as the sellers continue to pile in for a decline towards the 1.06 handle. The buyers will be eager to see the price rise back above the 1.0727 level to regain some control and start targeting new highs.
EURUSD technical analysis – 4 hour time frame
EURUSD 4 hours
On the 4-hour chart we can see that we have a strong support around the 1.0680 level, where the price was rejected several times in the last few days. We can also see that price has made lower highs as the market continued to test support. This is bearish price action and it also formed what appears to be a descending triangle.
A break to the downside should see bearish momentum increase, with sellers piling in for a drop to the 1.06 handle. The buyers, on the other hand, will want to see a break to the upside to negate the bearish setup and position for a rally to the 1.08 handle.
EURUSD technical analysis – 1 hour time frame
EURUSD 1 hour
On the 1-hour chart, we can see that we have an interesting resistance zone around 1.07 as the price reacted to it several times. A break above this should see the buyers extend the jump from the 1.0670 support to the 1.0727 resistance. The sellers, on the other hand, could lean on it to position a break below the support with a better risk to reward. The red lines define the average daily range for today.
Upcoming catalysts
Today we get the latest US Jobless Claims numbers, while tomorrow we end the week with the US PCE report.
