EURUSD Technical Analysis | Forexlive

USD

• The Fed left interest rates unchanged as expected at the last meeting, with virtually no change in its statement. The Dot Plot showed three more rate cuts for 2024 and the economic projections were improved with higher growth and inflation and lower unemployment.
• The US CPI beat expectations for the third consecutive month, while the US PPI was in line with forecasts.
• U.S. NFP beat expectations across the board, although average hourly earnings were in line with forecasts.
• The US ISM Manufacturing PMI significantly exceeded expectations, as the price component continued to rise, while the US ISM Services PMI missed expectations, with the price index falling to a 4-year low.
• U.S. retail sales far exceeded expectations across the board, with positive revisions from previous figures.
• The market now expects a first rate cut in September.

EUR

• The ECB left interest rates unchanged as expected and opened the door to a rate cut in June.
• The recent Eurozone CPI did not meet expectations.
• The labor market remains historically tight, with the unemployment rate at historically low levels.
• The latest Eurozone PMI indices exceeded expectations for services, while that of the manufacturing sector missed a further contraction.
• The market expects the ECB to cut rates in June.

EURUSD Technical Analysis – Daily Timeline

On the daily chart, we can see that EURUSD broke the key support at 1.07 and extended the decline to the 1.06 handle as the divergence between the Fed and ECB strengthened. The pair pulled back this week to retest broken support turned resistance and fell back to the lows as we had a hawkish comment from the Fed’s Williams and the Israeli strike on Iran this evening. Sellers will want to see price break lows to increase bearish bets at the 1.05 support zone, while buyers will look for a break above 1.07 resistance to start targeting the 1 handle ,10.

EURUSD Technical Analysis – 4 hour time frame

On the 4-hour chart, we can see that price has diverged with the MACD around the 1.06 handle, which is usually 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 decline as sellers stepped in with risk set above the Fibonacci level to target new lows. Buyers may want to pile in around the lows to position themselves for a move back towards resistance while aiming for a break above it.

EURUSD Technical Analysis – 1 Hour Timeframe

On the hourly chart, we can take a closer look at recent price action as the pair approaches the lows. Iran downplayed the Israeli strike tonight, so we can put this geopolitical event behind our backs. The market may respond with some positive risk sentiment today, so buyers may try to position themselves for a move back toward resistance. A break below the low, however, would invalidate the bullish setup and likely trigger more selling.