EURUSD Technical Analysis

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

EUR

• The ECB left interest rates unchanged as
  expected and opened the door for a rate cut in June.
• The recent Eurozone CPI missed
  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 while the Manufacturing one missed dropping
  further in contraction.
• The market expects the ECB to cut rates in June.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that EURUSD broke
the key 1.07 support and
extended the drop into the 1.06 handle as the divergence between the Fed and
the ECB became stronger. The pair this week pulled back to retest the broken support now turned resistance and fell
back to the lows as we got a hawkish Fed’s Williams comment and the Israeli
strike against Iran tonight. The sellers will want to see the price breaking
the lows to increase the bearish bets into the 1.05 support zone, while the
buyers will look for a break above the 1.07 resistance to start targeting the
1.10 handle.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price diverged with the
MACD around
the 1.06 handle, which is generally a sign of weakening momentum often followed
by pullbacks or reversals. In this case, we got a pullback into the 1.07
resistance zone before another drop as the sellers stepped in with a defined
risk above the Fibonacci level to target new lows. The buyers might want to
pile in around the lows to position for a rally back into the resistance
targeting a break above it.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the pair getting near the lows. Iran
downplayed the Israeli strike tonight, so we might put this geopolitical event
behind our backs. The market could react with some positive risk sentiment
today, so the buyers might try to position for a rally back into the
resistance. A break below the low though would invalidate the bullish setup and
likely trigger more selling.

This article was written by FL Contributors at www.forexlive.com.