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 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 got
rejected recently by the trendline where we
had also the confluence of the
61.8% Fibonacci retracement level
and the red 21 moving average. The
pair sold off following another hot US CPI report and it’s now trading around
the key 1.07 support zone. We can notice that this could be the neckline of a
big head and shoulders pattern,
so a break lower could take us to the 1.05 handle. The buyers will likely step
in around the 1.07 support to
position for a rally back into the 1.10 handle, while the sellers will look for
a break lower to target the 1.05 handle.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the sellers will have a better risk to reward setup
around the 38.2% Fibonacci retracement level where they will also find the
confluence of the red 21 moving average and the daily 8 moving average. The
buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into the 1.10 resistance.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with
the MACD around
the key support. This is generally a sign of weakening momentum often followed
by pullbacks or reversals. In this case, it should be a signal for a pullback
into the base of the divergent formation around the 1.0760 level near the
Fibonacci level.

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