Overview
Yesterday, the US Consumer Confidence report surprised to the downside
with one of the largest drops since 2021. The labour market data in the report
softened a lot and it generally leads the unemployment rate.
The market responded by
raising the probabilities for the Fed to cut by 50 bps in November to roughly
60%. The question now is whether this is just about the low hiring rate or
something worse. We will have to wait for the NFP report next Friday.
On the EUR side, the market
started to price in a back-to-back cut in October from the ECB following the
latest Eurozone PMIs where the data deteriorated more than expected. Moreover,
ECB’s Muller opened the door for a rate cut in October saying that it cannot be
totally excluded.
EURUSD Technical
Analysis – Daily Timeframe
On the daily chart, we can
see that EURUSD rallied back to the 1.12 handle after a brief selloff following
the Eurozone PMIs. From a risk management perspective, the buyers would have a
much better risk to reward setup around the trendline, although a break of the high will
likely see the bullish momentum increasing. The sellers, on the other hand,
will likely step in around these levels to position for a drop into the
trendline.
EURUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have another minor trendline defining the current bullish momentum.
If we were to get a pullback, the buyers will likely lean on the trendline to
position for a rally into the 1.13 handle. The sellers, on the other hand, will
want to see the price breaking lower to increase the bearish bets into the
major trendline.
EURUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much we can add as buyers will look for a breakout to the upside to
increase the bullish bets into new highs, while the sellers will look to step
in around these levels to target a pullback into the trendline.. The red lines
define the average daily range for today.
Upcoming
Catalysts
Tomorrow, we get the latest US Jobless Claims figures, while on Friday, we
conclude the week with the US PCE.
This article was written by Giuseppe Dellamotta at www.forexlive.com.