US

• The Fed left interest rates unchanged as
  expected at the last meeting.
• The macroeconomic projections were revised higher,
  and the Dot Plot showed that the FOMC still expects another rate hike by the
  end of the year with less rate cuts projected in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully.
• The US Core PCE last
  week came in line with expectations, so the market’s pricing barely changed.
• The labour market remains
  pretty resilient but we are starting to see some weakness as Continuing Claims missed
  expectations once again last week pointing to an upward trend.
• The US Retail Sales recently
  beat expectations by a big margin with positive revisions to the prior figures,
  suggesting the consumers’ spending remains solid.
• The recent US PMIs showed
  that the economy now looks more balanced.
• Fed Chair Powelland other FOMC members continue
  to highlight
  the rise in long term yields as doing the job for the Fed and therefore they
  are expected to keep rates steady this week.
• The market doesn’t expect the Fed to hike anymore.

EU

• The ECB left interest rates unchanged as
  expected as the central bank has ended its tightening cycle.
• President Lagarde highlighted
  the weakness in the Eurozone economy and reaffirmed that rates will make a
  substantial contribution to curbing inflation.
• The Eurozone CPI today missed
  expectations on the headline figures but the Core measure remained unchanged.
  This won’t change the ECB’s stance anyway.
• The labour market remains
  very tight with the unemployment rate hovering at record low levels.
• The recent Eurozone PMIs missed
  across the board as the economy continues to struggle.
• Overall, the economic data has been showing signs
  of fast deterioration, which gives the ECB a good reason to keep rates steady.
• The market doesn’t expect the ECB to hike anymore.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the EURUSD pair
bounced around the key 1.05 support and
avoided a breakout of the bear flag. This
might have been also a “break and retest” pattern following the breakout of the
major downward trendline, so the
buyers might have more conviction to target new highs. The moving averages are now
crossed to the upside and the price continues to print higher highs and higher
lows. These are early bullish signs.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price broke
through the resistance zone around the 1.0620 level with the buyers now eyeing
the upper bound of the channel. That’s where we can expect the sellers to step
in again with a defined risk above the trendline to position for another drop
into the lower bound of the channel and aiming for a breakout. The buyers, on
the other hand, will want to see the price breaking above the upper bound of
the channel to extend the rally into the 1.08 handle.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
had a divergence with
the MACD right
when the price was approaching the lower bound of the flag pattern, the broken
downward trendline and the key 1.05 support zone. This is generally a sign of
weakening momentum often followed by pullbacks or reversals. In this case, we
got a reversal, and the odds are now in favour of a rally into the upper bound
of the channel.

From a risk management perspective, the
buyers would be better off to lean on the resistance turned support around the
1.0620 level where we can also find the confluence with
the trendline, the red 21 moving average and the Fibonacci
retracement levels. If the price breaks below the
trendline, the bullish setup would be invalidated, and the sellers will pile in
to target a breakout of the bear flag.

Upcoming Events

This week, we will get lots of tier one data points with
the US labour market and the FOMC decision in focus. Today, we have the US
Employment Cost Index and the Consumer Confidence report. Tomorrow, it will be
the time for the US ADP, the ISM Manufacturing PMI, the Job Openings data and
the FOMC rate decision. On Thursday we will get the US Jobless Claims data,
while on Friday we conclude the week with the Eurozone Unemployment Rate, the
US NFP report and the ISM Services PMI.

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