EURUSD Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as
  expected at the last meeting and dropped the tightening bias in the statement.
• The US CPI and
  the US PPI beat
  expectations for the second consecutive month.
• The NFP report beat
  expectations on the headline number, but the unemployment rate and the average
  hourly earnings missed notably. Moreover, the US Jobless Claims beat
  expectations across the board with a big positive revision to Continuing
  Claims.
• The latest US ISM
  Manufacturing PMI missed expectations by a big margin
  remaining in contraction with the US ISM Services
  PMI
  following suit but holding on in expansion.
• The US Retail Sales missed
  expectations across the board although the data improved from the prior month.
• The market sees basically a 50/50 chance of a hike
  in June now.

EUR

• The ECB left interest rates unchanged as
  expected at the last meeting revising inflation and growth expectations
  downwards and maintaining the usual data dependent language.
• The recent Eurozone CPI beat
  expectations.
• The labour market remains historically
  tight with the unemployment rate hovering at record lows.
• The latest Eurozone PMIs beat
  expectations on the Services side with the measure jumping back into expansion
  while the Manufacturing one missed dragged lower by Germany’s performance.
• The market expects the ECB to cut rates in June.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that EURUSD eventually
broke below the key trendline and extended
the fall as the sellers piled in on the breakout. There’s not much else we can
glean from this chart, so we need to zoom in to see some more details.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a
downward trendline defining the current downtrend with the red 21 moving
average for confluence. In case
we get a pullback into the trendline, we can expect the sellers to step in with
a defined risk above the trendline to position for a drop into the 1.08 handle.
The buyers, on the other hand, will want to see the price breaking higher to
invalidate the bearish setup and increase the bullish bets into the 1.10
handle.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the latest
leg lower is diverging with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be a signal for a pullback with the resistance zone
around the 1.09 handle being the last line of defence for the sellers. If the
price breaks above the resistance, we can expect the sellers folding and the
buyers increasing the bullish momentum into new highs.

Upcoming Events

Tomorrow we have the FOMC rate decision on the agenda
where the central bank is expected to keep rates unchanged. On Thursday, we
conclude with the US Jobless Claims figures and the latest Eurozone and US
PMIs.