US:
- The Fed hiked by 25 bps as
expected and kept everything unchanged at the last meeting. - Fed Chair Powell reaffirmed their data dependency
and kept all the options on the table. - Inflation measures
since then showed further disinflation. - The labour market
displayed signs of softening although it remains fairly solid. - Overall, the economic data started to surprise to
the downside lately. - Last week the ISM Services PMI and Jobless Claims
surprised to the upside. - The Fed members are leaning more towards a pause in
September. - The market doesn’t expect the Fed to hike at the September
meeting, but there’s now a 50/50 chance of a hike in November.
EU:
- The ECB hiked by 25 bps and
changed a line in the statement that leant more on the dovish side at the last
meeting. - President Lagarde, in line with the Fed, just
reaffirmed their data dependency and kept all the options on the table. - Inflation measures
did soften a bit but remain uncomfortably high. - The labour market remains
very tight with the unemployment rate remaining 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 next 6 months. - The message from ECB members has been mixed.
- There’s basically a 50/50 chance that the ECB hikes
by 25 bps at the upcoming meeting.
EURUSD Technical Analysis –
Daily Timeframe
EURUSD Daily
On the daily chart, we can see that the EURUSD pair
remains in a clear downtrend with the price printing lower lows and lower highs
and the moving averages being
crossed to the downside. We recently got a bounce around the 1.07 handle and
the price is now pulling back into the downward trendline where we
will also find the broken upward trendline and the red 21 moving average for confluence. That’s
where we can expect the sellers to step in with a defined risk above the broken
trendline and target the 1.05 handle.
EURUSD Technical Analysis –
4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can see that the price this
morning reacted to the resistance zone
around the 1.0770 level, but we might see another push to the upside into the
1.08 handle where we have much more technical confluence that should act as a
stronger barrier and a better entry area for the sellers. The buyers, on the
other hand, will want to see the price breaking above the 1.08 handle to
invalidate the bearish setup and position for more higher highs.
EURUSD Technical Analysis –
1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, we can see that we
recently got a divergence with
the MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we saw a pullback into the resistance area around the
1.0770 level where the sellers piled in for more downside. The break below the
counter-trendline should be another confirmation that the downtrend has
restarted and we are likely to see new lower lows soon.
Upcoming Events
This week we have many important events beginning with
the US CPI tomorrow, which is expected to show an increase in headline
inflation but further disinflation in the core measure. On Thursday, it will be
the time for the ECB Policy Decision and later in the day we will see the
latest US Jobless Claims, PPI and Retail Sales data. Finally on Friday, we get
the University of Michigan Consumer Sentiment report.
