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. From a risk management perspective, the sellers will
have a much better risk to reward setup around the 1.07 handle where they will
find the confluence of the
38.2% Fibonacci retracement level
and the moving averages. The
buyers, on the other hand, will need to break above that resistance zone to
start targeting new highs.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
started to diverge with the
MACD around
the 1.06 handle. This is generally a sign of weakening momentum often followed
by pullbacks or reversals. In this case, it might be a signal for a pullback
after such a huge selloff. The buyers might start to pile in around these
levels with a defined risk below the 1.06 handle to position for a rally into
the 1.07 resistance.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
clearly the divergence with the MACD and we can also notice that the recent
price action formed what looks like a descending
triangle. The price can break on either side of the pattern
but what follows next is generally a sustained move in the direction of the
breakout. In this case, if we get a break to the downside, we can expect the
sellers to increase the bearish bets and take the pair into the 1.05 handle. On
the other hand, if we get a break to the upside, the buyers should increase the
bullish bets into the 1.07 resistance.

Upcoming Events

This week the only notable report left is the US Jobless
Claims figures tomorrow.

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