Fundamental Overview
The USD got a short term boost recently as Trump floated reciprocal tariffs. That came after a good US NFP report where the data was mixed at best but still pointing to strength. The jump in average hourly earnings caught the eye but that might have been distorted by the drop in average weekly hours.
We’ve also got another jump in inflation expectations in the University of Michigan Consumer Sentiment survey showing that the tariffs news is the main culprit of the recent surge in expectations.
The focus now switched to the US CPI report due later today where Core inflation is expected to tick lower which would be a welcome news. A lower than expected print should see the US Dollar losing ground across the board once again, while a hot reading might boost the greenback for the rest of the week.
On the EUR side, the ECB recently cut interest rates by 25 bps as expected and overall we didn’t get anything new from the event as the central bank remains data dependent regarding the pace and magnitude of cuts. The latest PMIs showed an encouraging rebound in activity and the news of a peace deal in the Russia-Ukraine war continue to gather momentum. That should be positive for the economy all else being equal.
EURUSD Technical Analysis – Daily Timeframe
EURUSD Daily
On the daily chart, we can see that the EURUSD price action continues to be mostly rangebound. The price is now trading between the 1.0344 support and the 1.0447 resistance. The buyers will look for a break higher to extend the rally into the 1.06 handle, while the sellers will look for a break lower to target the 1.0222 level next.
EURUSD Technical Analysis – 4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can see more clearly the recent price action and the trading between the key levels. There’s not much we can add here as buyers and sellers will lean onto those key levels or look for breakouts.
EURUSD Technical Analysis – 1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, we can see that we have some consolidation just above the key 1.0344 level. From a risk management perspective, it would be much better to wait for the US CPI report as any technical setup can be invalidated in a blink of an eye when the data gets released. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US CPI report. Tomorrow, we get the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the US Retail Sales data.