EURUSD Technical Analysis – Approaching key levels 0 (0)

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.

This article was written by FL Contributors at www.forexlive.com.

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Aussie finds it tough to build on recent bounce 0 (0)

It is a bit of a head scratcher considering the more positive mood in equities so far today. The only thing I can point to is lower commodity prices in which we are seeing iron ore prices fall slightly after the recent rally. That said, I reckon traders engaging in shorts are also seeing the bounce this week as an opportunity to add to their position.

I mean, not withstanding, the same factors that have driven the aussie lower since the middle of last month are very much still holding true today as well. And if you consider China’s struggles and a worsening global economy, that’s no good reason to suddenly turn to bullish bets on the aussie – especially when rate differentials are in favour of the dollar as well.

For AUD/USD, buyers will need to climb back above 0.6500 to at least have some form of confidence back. Otherwise, sellers have a key area to lean on to keep the downside momentum going.

For now, sellers will look to try and retest the 100 and 200-hour moving averages at 0.6427-38 again to try and regain some near-term control while buyers will look to defend that in order to maintain some hope on the recent bounce.

This article was written by Justin Low at www.forexlive.com.

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UK August retailing reported sales -44 vs -25 prior 0 (0)

This is not a good look as UK retail sales is seen falling in August at its quickest pace since March 2021. Adding to the misery is that retail stores continue to see a tough time in the month ahead, with the expectations reading still deeply negative at -21 (although an improvement to the -32 reading last month). The quarterly business situation balance also falls to its lowest this year at -14 now, down from +6 in May.

This article was written by Justin Low at www.forexlive.com.

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