EURUSD Technical Analysis – Approaching key levels

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• The US economic data keeps on surprising to the
  upside, but inflation expectations and CPI readings continue to show
  disinflation with the last two Core CPI M/M figures
  coming in at 0.16%.
• The US PMIs
  yesterday missed expectations across the board and brought down Treasury yields
  weakening the US Dollar.
• At the moment, the market doesn’t expect another
  hike from the Fed, but the next NFP and CPI data will be crucial to confirm or
  change this view.

EU:

• The ECB hiked by 25 bps and
  changed a line in the statement that leant more on the dovish side.
• President Lagarde didn’t hint to what we can expect
  next and, in line with the Fed, just reaffirmed their data dependency and kept
  all the options on the table.
• The data for the Eurozone has been consistently
  missing expectations, but the recent inflation and employment reports
  remained strong.
• The Eurozone PMIs missed
  expectations across the board with the Services sector plunging in contraction.
• The market is now expecting the ECB to remain on
  hold in September.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the EURUSD
selloff is losing momentum although the bias remains bearish given the lower
lows and lower highs and the moving averages being
crossed to the downside. We can see that the price is currently bouncing on a
previous swing low level and we might see a bigger pullback into the downward trendline where we
will also find the red 21 moving average for confluence.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
been diverging with the
MACD for a
while. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, we might see the price pulling back into
the trendline where we can also find the Fibonacci retracement levels
for confluence. This is where the sellers are likely to pile in with a defined
risk above the trendline and target a break below the 1.08 handle. The buyers,
on the other hand, will want to see the price breaking above the trendline to
confirm the reversal and target new highs.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor resistance zone around the 1.0875 level that should act as a
barometer for the sentiment. In fact, a break above it should give the buyers
more room to extend the rally into the trendline. Vice versa, as long as the
price stays below the level we should see the sellers piling in at every
pullback.

Upcoming Events

Today we have the US
Jobless Claims, and the market will want to see if the labour market remains
strong or starts to show signs of weakness. Strong readings should keep the
hawkish expectations steady and support the US Dollar, while weak data should see
a weaker greenback in the short term as the market would lean even more on the
dovish side. Tomorrow we will hear from Fed Chair Powell who is expected to
just repeat their data dependency and keep all the options on the table.