Daily Technical Analysis by OnEquity

Commercial Content Analysts
1

Rises Above 1.0850, With All Eyes on the Data

The EUR/USD is up slightly around the 1.0860 level in early Asian trading hours on Monday. The pair rose as market traders are widely anticipating the US Federal Reserve to cut interest rates in September, which caused the dollar (USD) to move sharply lower.

Inflation in the US, which is generally measured by the change in the personal consumption expenditures (PCE) price index, barely fell in June compared to a year ago, easing the way for an interest rate cut by the Federal Reserve in September. PCE inflation continued its slowdown in June, falling from 2.6 per cent y/y in May to 2.5 per cent in June. On a monthly basis, the PCE figure rose by about 0.1% in June, after being unchanged in May. The core PCE price index, the measure of inflation used for an annual view and preferred by the Fed, rose about 2.6 year-on-year in June, up from 2.5% in May, according to Commerce Department figures released on Friday.

However, the lower June inflation in the US is not fully potent for the Fed to start cutting interest rates at its expected August meeting on Wednesday this week. Similarly, analysts noted that there is significant progress on inflation and this will most likely allow the Fed to move closer to interest rate cuts and as such, they also said they still expect three rate cuts this year, starting at the September FOMC meeting. Financial markets have dismissed by about 90% the likelihood of a September cut, followed by another cut in November and December, according to the CME’s FedWatch tool.

On the other hand, traders expect more rate cuts from the European Central Bank (ECB) in the near term. This, likewise, could weigh on the euro (EUR) versus the dollar (USD). The previous week, the ECB left interest rates unchanged, although weaker German IFO survey results and other softer data are paving the way for another rate cut by the bank. Traders will be looking closely at preliminary second quarter Gross Domestic Product (GDP) data for Germany along with the euro zone. If the data turns out better than expected, the common currency could gain ground against the dollar.

EUR/USD daily technical analysis for July 28nd:

According to the behavior on the attached daily chart, the trend remains strongly [bearish] towards the break of the important psychological support level of 1.0800, which if it happens, will give the bears more momentum to move sharply lower. Technically, the next important support levels will be 1.0745 and 1.0660, respectively. On the other hand, in the same time frame. As mentioned above, there will not be a strong and important change in the overall trend towards an uptrend without moving towards the psychological resistance of 1.1000 again.

2

Bearish Momentum May Last

The EUR/USD is expected to remain under pressure with signs of moderation in the coming days due to the amount of data to be released this week, especially today, Wednesday, when the Eurozone PPI and the Federal Reserve’s interest rate decision and subsequent statement will be released. The EUR/USD has lost ground this week from its July high of 1.0948 and has now had three straight weeks of declines.

s for the outlook for the currency pair, we expect a slight pullback to near the 50-day moving average at 1.0811 over the next few days. Additionally, this is the possible location for the 38.2% Fibonacci retracement from the high to the 2024 low.

In technical terms, a break of the EUR/USD exchange rate support level at 1.0780 would give the bears control over the trend.

This week, both the Federal Reserve and the European Central Bank will be in the spotlight, especially today, Wednesday, as inflation-related figures were released yesterday, primarily from Germany.

With the European Central Bank expected to cut interest rates again in September, it would take a major new data release to have a long-lasting impact on the Euro. Conversely, this week’s volatility will likely be driven by the dollar. The Federal Reserve will make its policy decision later today. Additionally, it seems that there will be no change in US rates.

Expectations are for an expansionary stance in line with estimates for the first interest rate cut in September. Currently, the market seems predisposed to such an outcome, which would translate into the dollar rising if the Fed leaves any doubt about whether it will begin its rate-cutting cycle in September. Additionally, the Fed is expected to continue its strategy of highlighting concerns that keeping interest rates unchanged for an extended period could significantly impact the labor market.

This is consistent with the Fed’s statement that it believes it can afford to cut US interest rates before inflation falls to its 2% target. On Friday, the most notable event for the dollar will be the release of the US employment report. If the data falls below expectations, the market will anticipate further easing of Fed monetary policy in the months ahead, which will weigh on the dollar.

July US nonfarm payrolls are expected to show an increase of 178,000 jobs, with the unemployment rate at 4.1%. In June, the figure was higher than expected, at +206,000 jobs.

EUR/USD Daily Technical Analysis for July 31st:

There is no change in our technical view on the performance of the euro against the dollar. The overall trend remains bearish, and a break of the 1.0800 support is feasible, which will consolidate control by the bears, potentially leading to further losses.

Technical indicators will move towards strong oversold levels on the daily chart if the euro/dollar price approaches the support levels of approximately 1.0735 and 1.0600. For the same time frame, the psychological resistance 1.1000 will continue to have the most relevance for the upward shift of the overall trend.

3

EUR/USD declines, fails to hold 1.10 level

The EUR/USD pared its recent gains and retreated from the 1.1000 level on Tuesday as markets continue to digest a recent rebalancing in Forex market flows. Investors have possibly regained equilibrium and have once again returned to betting on an increase in the pace of rate cuts by the Federal Reserve in September. Tuesday’s euro zone economic data had a slight impact on the market and Wednesday’s data will be released on the average level.

Pan-European retail sales contracted by -0.3% y-o-y in June, below estimates of 0.1% and down from a revised 0.5% in the year-ago period. German industrial production figures will be released on Wednesday, which are expected to rebound to 1% month-on-month growth in June from the previous period’s contraction of -2.5%.

According to CME’s FedWatch tool, investors are looking at a two-to-one chance of a double 50 basis point cut when the Federal Open Market Committee announces its interest rate decision on September 18. Currently, with the cut in place, the rate markets see zero chance of the Fed keeping rates unchanged for this year, with a total of four estimated quarter-point cuts for the latter part of the year.

During this week, watch for any news from Fed policymakers pointing to the desirability of accelerating interest rate cuts in the United States. This would boost the euro.

EUR/USD Daily Technical Analysis for August of 7th:

According to the daily chart, the uptrend in the EUR/USD remains in place. Selling from above is the best trading strategy. Obviously, selling above the psychological resistance at 1,000 is the best. The trend of the euro against the dollar today will be conditioned by the prospects of future signs of economic recession in the United States that may be announced by the heads of central banks around the world. On the other hand, and according to the daily chart, the 1.0820 support level will continue to be relevant for the bears to regain control of the trend.

4

Daily Technical Analysis EUR/USD: Rallies Above 1.0900, Upside Limited by Middle East Tensions

This week, investors will be focused on new inflation data, such as the Producer Price Index (PPI) and the Consumer Price Index (CPI) in the United States on Tuesday and Wednesday. Retail sales and the University of Michigan consumer confidence index will also be released this week. Core PPI inflation and headline CPI inflation remain steady around 3% y/y, and investors expect the data to support expectations for a rate cut by the Federal Reserve.

That said, the EUR/USD has halted its streak of four straight days of losses and is trading near 1.0920 in the Asian session on Monday. Traders are also awaiting preliminary Eurozone Q2 Gross Domestic Product (GDP) data, which is due on Wednesday.

The euro, a risk-sensitive currency, could come under pressure due to the scale of geopolitical tensions in the Middle East. On Sunday, Israel’s Defense Minister Yoav Gallant told U.S. Defense Secretary Lloyd Austin that Iran’s military actions appear to be preparing for a full-scale attack on Israel. This action would be in retaliation for the reported assassination of Hamas leader Ismail Haniyeh in the Iranian capital in late July, according to Barak Ravid, editor of Axios.

Regarding the dollar, investors will likely focus on U.S. producer inflation data due Tuesday and consumer inflation figures due Wednesday. Traders are looking for confirmation that price growth remains stable.

Expectations of an interest rate cut by the Fed in September could put pressure on the US dollar, which could support the EUR/USD. According to CME’s FedWatch tool, it indicates a 51.5% chance of a 25 basis point rate cut at next month’s meeting, a considerable increase from the 26% chance recorded last week.

EUR/USD Daily Technical Analysis for August 12th:

The EUR/USD pair remains in a neutral pattern, and a bullish bias would be reinforced if it breaks back above the psychological resistance at 1.1000. On the other hand, according to the behavior on the daily chart, a return to the 1.0820 support zone will be important for the bears to regain control of the trend. Consequently, it is still preferable to sell the currency pair at higher levels.

5

Daily Technical Analysis EUR/USD: The pair moves amid dollar weakness

EUR/USD rose on Tuesday, supported by a broad-based weakening in U.S. dollar bids as U.S. Producer Price Index (PPI) inflation appeared to be cooling faster than expected. Traders continue to await EU Gross Domestic Product (GDP) growth figures, due in early European trading hours on Wednesday. Meanwhile, investors will turn their attention to upcoming U.S. Consumer Price Index (CPI) inflation figures as risk appetite expands in recovery mode.

Eurozone GDP for the second quarter is expected to remain at previous figures of 0.3% quarter-on-quarter and 0.6% year-on-year. Although no change is expected, a sharp deviation in either direction could generate a new round of risk-off selling in Euro markets if the number is low, or reinforce the current bullish stance if growth shows signs of picking up.

U.S. CPI inflation is expected to continue showing signs of cooling in July, with markets anticipating core CPI for the year ending in July to decline to 3.2% from 3.3% last year. Headline CPI is expected to follow the same trend, with median market estimates predicting a decline to 2.9% y-o-y from 3.0% previously.

U.S. PPI inflation fell to 2.2% y-o-y in July, down from the 2.3% estimate and further down from the revised 2.7% in the previous period. Core PPI inflation also fell to 2.4% y-o-y in July, down from an estimated 2.7% and further down from 3.0%. The continued decline in U.S. inflation pressure reinforced risk appetite during the U.S. stock market session, and market bets on a double 50 basis point cut by the Federal Reserve in September increased to 55%, according to CME’s FedWatch tool.

EUR/USD Daily Technical Analysis for August 14th:

Despite recovering on Tuesday, EUR/USD remains stuck below the previous week’s high, just above 1.1000. Bullish momentum may continue to drive intraday price action higher, but technical fragility poses a real risk as EUR/USD struggles to gain long-term traction ahead of the 200-day exponential moving average (EMA) near 1.0820.

6

Daily Technical Analysis EUR/USD: the pair is moving towards the 1.1050 level.

The EUR/USD extended its gains for the second session in a row, touching the 1.1030 level in Asian trading on Monday. The pair’s rise could be the result of increased chances of an interest rate cut in September by the Federal Reserve.

Last week, U.S. economic data showed that retail sales beat estimates, while the Producer Price Index (PPI) and Consumer Price Index (CPI) showed that inflation is on a downward trajectory. Additionally, U.S. housing starts fell nearly 6.8% in the month of July to 1.238 million units, following a 1.1% increase in June, which appears to be the lowest level since 2020. This decline has heightened fears about the resilience of the economy, particularly in light of recent more relaxed reports on inflation and labor.

Federal Reserve Bank of San Francisco President Mary Daly remarked Sunday that the central bank should adopt an approach that is gradual if borrowing costs are to be reduced, according to. Financial Times. Daly expressed her opposition to economists’ concerns that the U.S. economy is close to a sharp slowdown that would justify rapid interest rate cuts.

Similarly, Chicago Fed Board of Governors President Austan Goolsbee said central bankers should be cautious about maintaining a tightening-based policy longer than previously thought. Although it is not known whether the Fed will cut interest rates next month, failure to do so could be harmful to the labor market, according to CNBC.

In Europe, investors expect the European Central Bank to gradually cut interest rates. Monetary policymakers have been hesitant to commit to a new path of rate cuts because they are concerned that price pressures could reaccelerate.

EUR/USD Daily Technical Analysis for August 19th:

The pair is currently trading above the psychological resistance at 1.1000 will serve as support for bull control in the broader trend. Consequently, if gains increase to 1.1060 and 1.1120 levels, technical indicators may move to strong overbought levels. Above those levels, it may be best to sell. On the other hand, according to the behavior on the daily chart, the 1.0820 support level will remain perhaps the most relevant to end the uptrend.

7

Daily Technical Analysis EUR/USD: The Pair Rises Nearly 1% This Week Ahead of Jackson Hole

The most important event this week is the Federal Reserve’s Jackson Hole symposium, where Fed Chairman Jerome Powell is expected to speak publicly on Friday. At the same time, the market will focus on whether expectations of a 100 basis point rate cut by the central bank this year will be confirmed. Another factor that could become more favorable for the Euro and detrimental to the Dollar in the coming days, weeks, and months is the latest developments in the US election polls, which now seem to indicate that the Democratic Party candidate, Kamala Harris, is ahead of former President and Republican Party candidate Donald Trump in several key swing states.

On Tuesday, EUR/USD rose 0.4% and broke above 1.1100 for the first time since December 2023, reaching a new high for 2024. EUR/USD has now been in positive territory for three straight days and appears to be on track for a 1% gain since the market opened on Monday.

Early Thursday, the results of the pan-European Purchasing Managers’ Index (PMI) survey will be released, with the August Eurozone manufacturing and services PMIs expected to hold steady at 45.8 and 51.9, respectively.

Thursday will bring the results of the U.S. Purchasing Managers’ Index (PMI) business activity survey, as well as the start of the annual Jackson Hole Symposium, which will extend through the weekend. The minutes of the Fed’s latest meeting are due to be released on Wednesday, although markets will generally be fully focused on Thursday’s releases, looking for reasons or signals to move the market.

The U.S. manufacturing PMI is expected to hold steady at 49.6 for the month of August, while the services PMI is expected to drop one point to around 54.0 from 55.0. The start of the Jackson Hole Symposium is expected to draw much of investors’ attention on Thursday, although it is worth noting that Friday’s appearance by Fed Chairman Jerome Powell will likely indicate the overall market outlook for the week ahead.

EUR/USD Daily Technical Analysis for August 21th:

EUR/USD has made a new high for 2024, breaking above 1.3050, as markets sell the US dollar in the short term on a general level, rather than for any specific reason related to the single currency’s rise in price. It must be noted that EUR/USD has closed in the green for all but one of the last seven trading days and is in a bullish zone above the 200-day exponential moving average (EMA) at 1.0835.

However, the long-term consolidation range is strong on the technical charts, and a sharp reversal could trigger a move back below 1.1000.

8

Daily Technical Analysis EUR/USD: Moves Up to Around 1.1200 on Powell’s Conservative Fed Stance

The EUR/USD is extending its gains for the second session in a row, trading around 1.1190 during the Asian session on Monday. This rise in EUR/USD follows the weaker US dollar after the Fed Chairman’s dovish-sounding speech at the Jackson Hole Symposium last Friday.

Fed Chairman Jerome Powell said, “The time has come to tighten policy.” Although Powell did not indicate when the rate cuts will begin or their extent, markets are anticipating that the Fed will announce a rate cut of about 25 basis points at next month’s meeting.

Similarly, Philadelphia Fed President Patrick Harker stressed on Friday the need for the Fed to lower interest rates gradually. Conversely, Chicago Fed President Austan Goolsbee emphasized that monetary policy is at its most restrictive and that the Fed is focused on fulfilling its employment mandate.

Regarding the eurozone, Olli Rehn, a member of the European Central Bank’s Governing Council, said on Friday that slowing inflation and a weak economy in the zone strengthen the case for lower borrowing costs next month, according to Bloomberg. Growth estimates for Europe, particularly in the manufacturing sector, are highly subdued, further strengthening the case for a rate cut in September.

Additionally, Jane Foley, currency strategist at Rabobank, highlighted on Friday that the EUR/USD is expected to trade at 1.1200 on a three-month horizon. Foley added that the recent breakout and the start of a new Fed policy cycle seem to indicate a new trading range may be forming. However, she also stated that if key US data released in early September is stronger than market estimates, it could lead to potential pullbacks to around 1.1000 for the EUR/USD.

EUR/USD Daily Technical Analysis for August 26th:

Bids in EUR/USD remain bullish after the pair managed to bounce from the last swing low at the 200-day Exponential Moving Average (EMA) near 1.0850. In the absence of a significant break above 1.1300, investor short interest could once again push prices lower in the near term.

We will also need to closely watch how the pair trades at the start of the week following the Fed’s statements and their potential impact on Europe.

9

Daily Technical Analysis EUR/USD: A Deeper Upward Momentum Is Expected

The EUR/USD rose on Tuesday, benefiting from the continued easing in the markets relative to the U.S. dollar. The pair returned to recent highs after the week began with a small retracement of recent gains, although a new round of risk-on sentiment in the market pushed bids back to those levels. Despite this, EUR/USD continues to be trapped below 1.1200 as Eurozone bulls struggle to instill confidence in the Fib hike.

Fed Chairman Jerome Powell appears to have confirmed that the U.S. central bank will begin a rate-cutting cycle on September 18 during his speech last Friday at the Jackson Hole Symposium, causing market appetite to soar again.

On the euro side, the economic agenda is filled with relatively unimportant news, and Wednesday is shaping up to be a quiet session in both Europe and the United States. Investors will be watching for a speech by Christopher Waller, a member of the Federal Reserve Board of Governors, in the early hours of the U.S. session, while central bank watchers are also looking for headlines from the European Union’s Eurogroup meeting scheduled during the European session.

The European Union’s Harmonized Index of Consumer Prices inflation figures for August will be released early Friday, and Eurozone price growth is expected to fall to 2.8% year-over-year from 2.9%, as inflation pressures continue to ease, although not as quickly as European Central Bank policymakers had hoped.

Also on Thursday, U.S. gross domestic product figures for the second quarter will be released, expected to remain unchanged at 2.8% year-over-year. However, the key data of the week is the Personal Consumption Price Index for July, which is expected to rise from 2.6% year-over-year to 2.7% year-over-year and remain unchanged at 0.2% month-over-month. Market participants, motivated by hopes for rate cuts, believe that the inflation data will come in below estimates, while an above-estimated figure could create nervousness in investors’ risk appetite.

EUR/USD Daily Technical Analysis for August 28th

The EUR/USD is on track for its best monthly performance since November 2022, up more than 3.1% in the month of August alone. Despite the early pullback due to technical exhaustion this week, the Fib has managed to gain ground for four straight trading weeks and is pushing above the 200-day Exponential Moving Average (EMA) at 1.0832.

Unlike a healthy bid into bullish territory, the Fib is very vulnerable to a bearish pullback, and the absence of upside momentum could see prices pull back to the 50-day EMA at 1.0925.

10

Daily Technical Analysis EUR/USD: Rises to Near 1.1050 on Fed’s Dovish Tone

The EUR/USD breaks its three-day losing streak and trades around 1.1050 during the Asian session on Monday. The rise in the EUR/USD could be a consequence of the U.S. dollar’s lukewarmness following the negative sentiment surrounding the Federal Reserve. However, the July Personal Consumption Expenditures index may have supported the dollar and prevented the pair from rising further.

On Friday, the U.S. Bureau of Economic Analysis reported that the Personal Consumption Expenditures index increased by 2.5% year-over-year in July, matching the previous reading of 2.5% but below the forecast of 2.6%. On the other hand, the core PCE, which excludes volatile prices such as food and energy, increased by 2.6% year-over-year in July, in line with the previous figure of 2.6% but slightly below the consensus forecast of 2.7%.

According to CME’s FedWatch tool, markets fully anticipate at least a 25 basis point rate cut from the Fed at its meeting this month. Atlanta Fed President Raphael Bostic, one of the Federal Open Market Committee’s top hawks, signaled last week that the time may be ripe for a rate cut as a result of cooling inflation and a higher-than-expected unemployment rate.

François Villeroy de Galhau, a member of the European Central Bank’s (ECB) Governing Council, said on Friday, according to Bloomberg, that there are “good reasons” why the central bank should consider cutting interest rates in September. Villeroy de Galhau proposed action at the next meeting on September 12, noting that it would be fair and cautious to decide on a further rate cut.

EUR/USD Daily Technical Analysis for September 2nd:

After breaking its streak of losses over three straight days, it is now trading near 1.1050. It remains to be seen if the negative sentiment surrounding the Fed will become more pronounced when the stock market opens in the U.S.

The pair is likely to move more on the side of the U.S. dollar this week as the release of Non-Farm Payrolls and labor market-related data approaches. We will have to wait and see how the dollar reacts and whether oversold options are generated or if buying positions are secured.

We will see if the pair can return to higher levels this week near 1.105. A notable fact is that Labor Day is celebrated this Monday, so movement from the dollar side is likely to be minimal.

11

Daily Technical Analysis EUR/USD: Pair Seeks Support on Downward Pressure

The EUR/USD pair tilted lower during the day on Tuesday, with intraday bids at two-week lows before the day’s session closed near 1.1050. Price action remains limited as markets are bracing for a final US Non-Farm Payrolls release this week, although a missed Purchasing Managers’ Index figure appears to have revived fears of an impending recession.

Significant European data remains limited in the first half of the trading week, and on Thursday, Fiber traders may be busy with a pan-European retail sales update for July, followed by U.S. labor data estimates ahead of Friday’s NFP jobs release.

July pan-European retail sales are expected to rebound slightly, with an estimated 0.1% y/y compared to last period’s -0.3% decline. Gross Domestic Product figures for Europe will also be released on Friday, with growth expected to remain unchanged from last quarter’s figures.

The ISM U.S. manufacturing PMI for August came in below estimates at 47.2 points, under the market’s consensus forecast of 47.5 points. Although there was a slight rebound from July’s multi-month low of 46.8, it failed to galvanize the markets, giving investors the opportunity to pull back from a recent bullish tilt.

Friday’s nonfarm payrolls report will be released, marking the last round of key U.S. jobs data before the Federal Reserve announces its latest interest rate decision on September 18. The Non-Farm Payrolls report is expected to set the tone for market estimates regarding the depth of a Fed rate cut, as investors assume the start of a new rate-cutting cycle this month.

EUR/USD Daily Technical Analysis for September 4th:

FFiber prices have once again plunged into short-term technical hurdles, although traders continue to emerge in an effort to maintain balanced bidding, even if they fail to achieve a bullish recovery. EUR/USD set a 13-month high just above 1.1200 early last week, and a short-term pullback in the greenback’s moves has traders scrambling to maintain the bullish role on the charts.

The pair continues to trade north of the 200-day exponential moving average (EMA) at 1.0845. At the same time, despite remaining in the bullish zone, EUR/USD continues to face an increasingly sharp bearish pullback as shorts concentrate their positions on targets just above the 50-day EMA at 1.0956.

12

Daily technical analysis EUR/USD: EUR/USD trades below 1.100 on the back of possible ECB rate cuts

The EUR/USD is trying its best to recover last session’s losses and is trading around 1.090 during Monday’s Asian session. However, the EUR/USD’s gains could be limited as recent Eurozone inflation data has strengthened expectations of a rate cut by the European Central Bank (ECB) at its next meeting.

With headline inflation close to 2% and longer-term inflation estimates remaining around the same level, the ECB has sufficient justification to continue easing monetary policy. In addition, mixed Eurozone Gross Domestic Product data in the previous week has reinforced expectations of a possible rate cut by the ECB.

On Friday, U.S. economic data increased uncertainty about the likelihood of an aggressive rate cut by the Federal Reserve at its September meeting. The U.S. Bureau of Labor Statistics reported that nonfarm payrolls added 142,000 jobs in August, below the estimate of 160,000, although an improvement from July’s downwardly revised figure of 89,000 jobs. On the other hand, the unemployment rate fell to 4.2%, as estimated, compared to last month.

According to CME’s FedWatch tool, markets fully anticipate at least a 25 basis point rate cut by the Fed at its September meeting. The likelihood of a 50 basis point cut has declined slightly to 29.0%, down from 30.0% compared to a week ago.

Federal Reserve Bank of Chicago President Austan Goolsbee mentioned on Friday that Fed officials are beginning to align with the general market view that an interest rate tightening by the Fed is imminent, as reported by CNBC.

EUR/USD Daily Technical Analysis for September 9th:

The speculative price range for EUR/USD is 1.10050 to 1.12300.

The EUR/USD price has risen quite considerably since the end of June, although not without difficulty. Financial institutions have undoubtedly opted for a looser US Fed. However, the fear of a tightening of the Fed’s rate policy has been highlighted by the nervousness seen in many assets over the past week. Many analysts doubt a slowdown in the US economy.

Early trading this week is likely to be brisk, although if the EUR/USD manages to hold the support levels seen last week, this may be an indication that they believe the currency pair has reached a solid base and may be willing to try for slightly higher values if the ECB and Fed adapt to a more dovish stance.

13

Daily technical analysis EUR/USD: losing ground on German inflation and ECB rate cuts

The EUR/USD retreated on Tuesday after the latest inflation report in one of the eurozone’s most important economies, Germany, raised the possibility of an interest rate cut by the European Central Bank.

The EUR/USD slipped to 1.1021, as the decline in German inflation serves to fuel expectations of a 25 basis point rate cut by the ECB next Thursday.

Wall Street ended the session with positive numbers, while the U.S. dollar remains flat. European session data indicated that inflation in Germany fell to its lowest level in more than three years, as the Harmonized Index of Consumer Prices came in at 2%, the ECB’s target level.

On Thursday, the European Central Bank is forecast to lower interest rates by a quarter percentage point, although, according to analysts at BBH, the central bank would emphasize that it will keep monetary policy tight for as long as needed.

In addition, the ECB is expected to update its economic estimates, which include a downward revision to economic growth along with inflation. FX traders continue to bet on cuts between 50 and 75 basis points through the end of the year.

Looking ahead to the remainder of the week, the consumer price index for August in the U.S. is expected to be close to the Fed’s target of 2%. A lower-than-expected CPI report could increase the chances of the Fed easing interest rates by 50 basis points, even though most analysts believe that the Fed will tighten policy gradually.

CME’s FedWatch tool indicates that the chances of a 25 basis point rate cut are 70%, while the chances of a 50 basis point rate cut are 30%.

EUR/USD Daily Technical Analysis for September 10th:

In technical terms, EUR/USD is neutral with a possible bullish bias. However, a sharp break below the September 3 low at 1.1026 could open the door to further declines. Key support levels will remain exposed, such as the 1.1000 level, followed by the 50-day moving average (DMA) at 1.0958. A break of this level could lead to a test of the convergence of the 100 and 200 DMA around 1.0867/58, before heading to the August 1 low at 1.0777.

To resume the uptrend, investors would need to break above the September 9 high at 1.1091.

14

Daily Technical Analysis EUR/USD: Pair Moves Towards 1.100 Ahead of This Week’s Fed Meeting

The EUR/USD has started the week on a positive note and has returned to around 1.1090 in the early hours of the Asian session on Monday. Investors are focused on the long-awaited policy decision by the Federal Reserve this week. Markets continue to debate the size of the potential rate cut…

According to CME’s FedWatch tool, markets are forecasting about a 48.0% chance of a 25 basis point rate cut from the Fed at its meeting on September 17th and 18th. The chance for a 50 basis point rate cut has increased to 52.0% from 50.0% a day ago.

Investors will be paying close attention to the FOMC press conference for guidance on U.S. interest rates. If Fed Chairman Jerome Powell signals a more aggressive easing approach, there could be downward pressure on the U.S. dollar, potentially boosting the EUR/USD pair.

Gabriel Makhlouf, a member of the European Central Bank (ECB) Governing Council and governor of the Central Bank of Ireland, said Friday that the central bank still operates in a “very uncertain environment” and will be guided by data in making future monetary policy decisions. Makhlouf stressed that the ECB is not committed to a specific rate path, although it remains “determined to ensure” that inflation in the eurozone returns to the 2% target “in an appropriate manner.”

The Rabobank survey notes that the ECB announced its second rate cut of the cycle last week, with another cut expected before the end of the year. The latest ECB staff projections also show a downward revision to eurozone growth. While the Fed’s easing forecasts may weaken the dollar, Rabobank notes that unfavorable eurozone fundamentals could limit the upside potential of the EUR/USD pair in the near future.

EUR/USD Daily Technical Analysis for September 16th:

Although the pair has retraced in the short term from the 13-month highs of around 1.1200 seen at the end of August, the downward pressure is facing significant challenges from Fibonacci buyers, with the pair resisting a pullback to the 50-day Exponential Moving Average (EMA) at 1.0984.

Close attention should be paid to this week’s events on the USD side to assess their impact on the pair. The market is currently divided over the potential magnitude of the interest rate cuts.

15

Daily Technical Analysis EUR/USD: Near 1.1150 with Eurozone PMI Data in Focus

The EUR/USD is holding near 1.1150 in the early hours of Monday’s session. The U.S. dollar could lose value on the back of the increased possibility of further interest rate cuts by the Federal Reserve this year, which could underpin the EUR/USD.

Last week, the Fed cut interest rates by 50 basis points, bringing them to between 4.75% and 5.00%. Policymakers also predicted an extra 75 basis points of rate cuts by the end of the year.

However, Fed Chairman Jerome Powell said at the subsequent press conference that the Fed is in no rush to ease monetary policy and emphasized that future rate cuts of 50 basis points would be the standard going forward.

Last Friday, Philadelphia Fed President Patrick Harker stated that the Fed has effectively navigated a complex economic outlook recently. Harker compared monetary policy to driving a bus, where maintaining the right speed is crucial. He also emphasized that achieving maximum employment is about more than just the number of jobs, as the quality of those jobs must also be considered.

Regarding the euro, European Central Bank President Christine Lagarde stressed during her speech last Friday that monetary policy must remain adaptable in a world that is constantly evolving. While price stability remains the core objective of monetary policy, banks must be flexible in responding to the challenges of a changing economy.

EUR/USD traders are likely to look closely at the Purchasing Managers’ Index (PMI) data for the Eurozone and Germany due for release today, Monday. The monthly PMI is used as a leading indicator of business activity, providing information on economic health and trends.

EUR/USD Daily Technical Analysis for September 23th:

EUR/USD may be in a fairly familiar range and the highs made last Wednesday may be an overly ambitious target. Traders may seek quick bets early this week, a strategy boosted by the release of US GDP figures, which could offer stronger economic data. EUR/USD is likely to rebound quite strongly over the next three days as financial institutions prepare for the US growth releases.

Also, keep in mind that U.S. employment figures will be released on October 4. Short-term investors should be ready for bullish trades that could show sudden spikes if sentiment changes this week. The coming days will test key levels as balance is contested, so risk management should remain cautious, even as day traders bet on the upside.

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Daily technical analysis EUR/USD: pair regains ground on dollar weakness

EUR/USD moved away from the bearish trend and returned to touch the levels of recent highs on Tuesday, making another unsuccessful attempt at 1.1200. The euro has little reason to rise, but the general weakening of the dollar is helping to maintain the uptrend.

There is little data of interest on both sides of the Atlantic on Wednesday. Euro markets are completely absent from the economic agenda for the mid-week session. Dollar traders will have to wait until the New York market session ahead of a speech by Adriana Kugler, a member of the Federal Reserve Board of Governors, to be held at the Harvard Kennedy School in Cambridge.

Consumer confidence deteriorated across the board on Tuesday, with consumer estimates for 12-month inflation accelerating to 5.2%. Consumers likewise reported a general weakening in their estimates of six-month household financial situation, and consumer evaulations regarding overall business conditions have turned negative.

According to Coference Board Chief Economist Dana Peterson’s explanation, “Consumers’ assessments of current business conditions turned negative, while views on the current state of the labor market softened further. Consumers were also more pessimistic about future labor market conditions and less positive about future business conditions and future earnings.”

Michelle Bowman, a member of the Federal Reserve Board of Governors generated the sensation the previous week by being the lone dissenter from the Fed’s almost entirely unanimous decision to cut interest rates by 50 basis points. Fed Governor Bowman alluded to a smaller, 25 basis point cut, citing concerns that the Fed may be acting prematurely before confirming that inflation continues to move down toward the 2% target range.

Bowman’s concerns notwithstanding, declining consumer confidence prompted further bets in the rate markets in favor of a further cut in November. The CME’s FedWatch tool puts the outlook for a second 50 basis point rate cut on November 7 at nearly 60%, and a more moderate 25 basis point cut at just 40%. At the beginning of the week, interest rate traders were forecasting virtually identical odds for a rate cut of 50 or 25 basis points.

EUR/USD Daily Technical Analysis for September 25th:

Unlike Tuesday’s fresh push, the Fib is still unable to break above the 1.1200 level. The daily candles are starting to show signs of congestion, and bearish pressure appears to be building as the bears are set for another test of the 50-day Exponential Moving Average (EMA) at 1.1025.

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Daily Technical Analysis EUR/USD: Pair Rises Above 1.1150 Amid Fed Rate Cut Bets

The EUR/USD started the week with an upward trend, trading around 1.1170. This rise was driven by the weakening U.S. dollar, due to growing expectations that the Federal Reserve will continue its easing policy in November, with the possibility of another aggressive interest rate cut.

On Friday, the U.S. core personal consumption expenditure (PCE) price index for August rose by 0.1% month-over-month, falling short of market expectations for a 0.2% increase and also lower than last month’s 0.2% rise. This result, aligned with Fed estimates that inflation continues to ease, reinforces the likelihood of an aggressive rate-cutting cycle by the Federal Reserve. Meanwhile, core CPI increased by 2.7%, matching estimates and slightly higher than the previous reading of 2.6%.

CME’s FedWatch tool indicates that markets now see a 42.9% probability of a 25 basis point rate cut by the Fed in November, while the likelihood of a 50 basis point cut has risen to 57.1%, up from 50.4% a week earlier.

St. Louis Fed President Alberto Musalem, according to the Financial Times, mentioned on Friday that the Fed should start cutting interest rates “gradually” after the larger-than-usual half-point cut at the September meeting. Musalem acknowledged the potential for the economy to weaken more than expected, stating, “If that were the case, then a faster pace of rate cuts might be appropriate.”

Lower-than-expected inflation in France and Spain has also increased expectations that the European Central Bank (ECB) will implement another rate cut in October. If this happens, it would be the ECB’s third cut in its monetary easing cycle, which began in June. The ECB resumed rate cuts in September after pausing in July.

In addition, key economic data from Germany, including preliminary consumer price index (CPI) figures for September, is scheduled for release on Monday.

EUR/USD Daily Technical Analysis for September 30th:

The EUR/USD has stabilized within a 100-pip range since last Tuesday, awaiting further signals on interest rates from both the Fed and the ECB. The currency pair remains steady, holding the breakout from an ascending channel chart pattern formed on the daily timeframe near the psychological support of 1.1000. The 20-day Exponential Moving Average (EMA), currently near 1.1110, suggests a short-term bullish trend. The 14-day Relative Strength Index (RSI), however, is below 60.00, indicating that momentum may be weakening.

On the upside, a break above the 1.1200 resistance level could lead to further appreciation toward the 1.1276 high reached in July 2023. On the downside, the psychological support at 1.1000 and the July 17 peak near 1.0950 will serve as key support levels.

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Outlook for the Week of September 30-04 October

Key points to watch out for:

  • Investors see a good chance of another 50 basis point cut in November
  • Fed, ISM PMI, and NFP to mark rate cut bets
  • Eurozone CPI data awaited amid bets for more ECB cuts
  • China PMI indices and BoJ sentiment summary in focus

Will the Fed Decide on a Back-to-Back 50 Basis Point Rate Cut?

Although the dollar declined right after the Federal Reserve decided to cut interest rates by 50 basis points, with further reductions expected for the remainder of the year, the currency traded in a consolidated manner last week. Market participants anticipate additional cuts of approximately 75 basis points for both November and December. According to Fed funds futures, there is nearly a 50% probability of a follow-up double rate cut at the November meeting today.

With policymakers Christopher Waller and Neel Kashkari advocating for slower reductions going forward, the current market outlook suggests potential upside risk if more officials share this view or if upcoming data supports it. Investors will also be listening closely to Fed members this week, as the dot plot serves as a relatively accurate guide to the Fed’s future moves. This week’s data, especially the Non-Farm Payrolls report on Friday, October 4, may attract significant attention.

ISM PMI and Non-Farm Payrolls to Capture Attention

Ahead of the payroll report, the ISM manufacturing and non-manufacturing PMIs for September, due on Tuesday, October 1, and Thursday, October 3, respectively, will be closely monitored for early indications of how the U.S. economy concluded the third quarter. If the figures align with Fed Chairman Jerome Powell’s recent assertion that the economy is in good shape, the dollar could strengthen as investors reassess the need for another bold rate cut.

For the dollar to maintain its gains, Friday’s employment report will need to show signs of improvement. Current estimates suggest the U.S. economy added 145,000 jobs in September, up slightly from 142,000 in August, with the unemployment rate remaining steady at 4.2%. Average hourly earnings are expected to slow modestly from 0.4% to 0.3% month-on-month.

While these estimates do not point to a game-changing report, positive surprises in the ISM numbers or less pessimistic commentary from Fed policymakers could set a constructive tone for the U.S. dollar. Wall Street could also rally on stronger economic data, even if it signals a slowdown in rate cuts, as it would indicate the U.S. economy is not headed toward a recession.

Eurozone Inflation Under the Spotlight at a Divided ECB

In the Eurozone, the focus will likely be on the preliminary CPI data for September, due on Tuesday, October 1. With recent PMI figures encouraging market participants to increase bets on a rate cut, the probability of a 25 basis point reduction at the European Central Bank’s October 17 meeting has risen to nearly 75%. However, a recent Reuters report highlighted division within the ECB, with some officials advocating for a pause while others push for a rate cut. A compromise may involve maintaining rates in October and lowering them in December if the data does not improve.

The market’s base case remains a rate cut in October and possibly December. Further signs of slowing inflation in the Eurozone could reinforce this view, potentially leading to a decline in the EUR/USD pair. A break below the 1.1000 level could confirm a double-top formation on the daily chart, signaling a further decline.

Will Chinese PMIs Indicate Contraction?

China’s official PMI for September will be released on Monday, September 30. In August, the composite PMI was at 50.1, barely above the threshold that separates expansion from contraction. It remains to be seen whether business activity improved or slipped into contraction territory. Last week, the People’s Bank of China introduced a series of stimulus measures to boost economic activity and support the real estate sector, but market reaction was muted.

Despite these measures, oil prices fell due to easing supply concerns from Libya and reports that Saudi Arabia is abandoning its $100 per barrel target. The Chinese measures did little to boost demand expectations in the world’s largest oil importer, as investors seem to expect further fiscal support. Weak PMI data could trigger additional selling pressure in oil prices. However, pullbacks in risk-linked currencies like the Australian dollar and New Zealand dollar may be limited as global risk appetite appears to have increased.

Summary of BoJ Views on the Agenda

In Japan, the Bank of Japan will release the summary of views from its latest meeting, where policymakers left interest rates unchanged but raised their assessment of consumption due to rising wages. Governor Ueda noted that they are prepared to raise rates further if the economy evolves as expected.

Investors will closely scrutinize the summary for signals of a potential rate hike before the end of the year. Japan’s August employment data, due on Tuesday, October 1, and the Tankan survey on Thursday, October 3, will help shape investor sentiment.

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Daily technical analysis EUR/USD: bounces back to 1.1050 after Tuesday’s decline

EUR/USD fell nearly six-tenths on Tuesday, finding a slight bounce from the 1.1050 level, as geopolitical tensions and sour economic data unnerved flows regarding risk appetite, serving to bolster the dollar and dragging Fibs to their lowest prices on record in nearly a month.

Inflation in Europe as measured by the Harmonized Index of Consumer Prices declined in September at a faster pace than previously thought. Year-on-year core HICP inflation fell to 2.7% y/y, while month-on-month headline HICP inflation also fell to 1.8% during September, an even faster decline from the previous 2.2% than the estimated 1.9%.

Economic data in Europe will take a back seat for the remainder of the week as investors focus on Friday’s nonfarm payrolls report. In the lead up to Friday’s Non-Farm Payrolls report, a trickle of considerable economic data on the whole, albeit lacking in individual significance, seems to leave the picture unclear, and investors seem to be faced with somewhat lackluster releases that generally hit the bank.

For the month of September, the U.S. ISM manufacturing PMI remained at the 47.2 level for the second month in a row, below the estimated increase to 47.5. Additionally, ISM manufacturing prices paid remained at 47, below estimates. Also, ISM manufacturing prices paid declined to 48.3 down from 54.0 previously, which seems to be a sign of contraction.

Now, speaking of U.S. employment data, August JOLTS job openings increased to 8.04 million, surpassing the revised 7.7 million last period. Despite this, the increase in job openings is not likely to turn somewhat directly into further contractions, as the ISM manufacturing employment index for September declined to 43.9 from 46.0 previously, missing the estimated rise to 47.0.

In terms of geopolitical concerns, investors’ attention has focused on the Middle East after learning that Iran conducted a missile strike against Israel in response to Israel’s recent ground incursion into Lebanon. The U.S. has pledged to respond in support of Israel, which has investors wary of the possibility of an escalation of the current conflict.

EUR/USD Daily Technical Analysis for October 2nd:

Tuesday’s decline pushed the Fib towards the 50-day exponential moving average (EMA) around 1.1045. EUR/USD recorded some late-day bids, although the pair remains firmly unbalanced, completely reversing the latest upside move towards yearly highs above 1.1200. Buyers are now on the defensive and short-term momentum is increasingly tilting to the downside. The immediate short-term target for buying pressure will be to bring the buy line back above the 1.1100 level.

A figure of 144,000 jobs is anticipated. The basic rule is that any figure slightly below that number would demonstrate the need for further Fed cuts and maintain the risk-on bias around the world and in sterling. On the other hand, a significant decline could be somewhat counterproductive, as it could signal that the economy could be slipping into recession. Consequently, if the figures offer a large upside surprise, investors will be quick to bet that the Fed will slow the pace of cuts. Therefore, it is possible that they will lower interest rates. This is likely to lead to a recovery in the dollar, which would trigger a retest of the 1.1083 technical support level.

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Daily Technical Analysis EUR/USD: Near Its Lowest Level Since Mid-August and Fragile at 1.0975

EUR/USD starts the week with subdued sentiment after last week’s sharp losses, bringing the pair to its lowest level since mid-August following positive U.S. jobs data on Friday. Spot prices are hovering near 1.0975 and appear vulnerable to continuing the sharp pullback from the 14-month highs around 1.1200.

The U.S. dollar is strengthening at a seven-week high as traders scaled back their expectations for any interest rate cut by the Federal Reserve in November, following stronger-than-expected U.S. jobs data. The headline NFP report revealed that 254,000 jobs were added in September, beating consensus estimates, while the unemployment rate unexpectedly dropped to 3.8%. This suggests that the labor market remains resilient, while stronger-than-expected growth in average hourly earnings has stoked inflation concerns, diminishing expectations of a more dovish stance from the Federal Reserve.

The market’s current assessment indicates a nearly 95% chance that the Fed will either keep rates unchanged or cut them by 25 basis points at its two-day policy meeting on November 7. Additionally, geopolitical risks from Middle East conflicts helped the U.S. dollar index, which compares the greenback to a basket of currencies, post its strongest weekly performance since September 2022.

Conversely, the euro remained weak amid expectations that the European Central Bank may cut rates again in October due to easing inflationary pressures and slowing economic growth.

These forecasts were reinforced by statements from François Villeroy de Galhau, a member of the ECB’s Governing Council, suggesting that the central bank could cut rates in October as weak economic growth raises the risk of inflation falling below the 2% target. This is another factor weighing on EUR/USD, increasing expectations of more short-term downside pressure. Thus, any recovery attempt could be viewed as a selling opportunity, with gains likely to fade swiftly.

EUR/USD Daily Technical Analysis for October 7th:

The EUR/USD exchange rate saw a sharp sell-off last week, and while some traders noticed minor support heading into the weekend, caution remains necessary. Friday’s slight rise may indicate a potential bullish outlook for the week ahead, but given risk-averse conditions in global markets, traders should wait for a stronger uptrend to confirm.

Technical traders believe that current support levels are crucial, and if they hold, EUR/USD could aim for the higher price levels observed last week. For EUR/USD to move higher this week, Middle East risk conditions must ease, and U.S. inflation figures need to indicate control by Thursday. For now, EUR/USD remains in a volatile and uncertain phase.