Yesterday, the USD got a
boost from a higher than expected US CPI report but gave back the gains pretty quickly.
There are two reasons for such a reaction.

The first is that at the
same time of the US CPI release we got the US Jobless Claims figures which
jumped to the top of their yearly ranges. The culprit was attributed mainly to
Hurricane Helene and the strikes.

The second reason is that
the market was already positioned for a higher than expected reading as we’ve
been seeing consistent upside in Treasury yields and the US Dollar in the days
leading up to the release. Therefore, we got kind of a “sell the fact” reaction.

On net, it was a slightly
hawkish report but it looks like the market needs some more reasons to keep
bidding the US Dollar now that the market’s pricing is back in line with the
Fed’s projections.

On the EUR side, the market
has fully priced in a back-to-back 25 bps cut in October from the ECB following
the weak data and dovish comments from ECB officials.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD bounced around the 1.09 handle following the US CPI release and
it’s now looking like we could get a pullback into the 1.10 handle where we can
find the confluence
of the broken trendline and a key swing level.

That’s where we can expect
the sellers to step in with a defined risk above the 1.10 handle to position
for a drop into the 1.08 handle next, while the buyers will look for a break to
the upside to increase the bullish bets into the 1.12 handle.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we had a downward trendline that was defining the bearish momentum.
The price broke above the trendline this morning in a potential signal of more
upside to follow.

The buyers will likely pile
in around these levels to position for a pullback into the 1.10 handle. The
sellers, on the other hand, will want to see the price falling back below the
trendline to position for new lows.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor resistance
around the 1.0955 level which is the high set on the US CPI reaction. A break
above this level will likely give the buyers more confidence to target the 1.10
handle.

The sellers, on the other
hand, will likely pile in around these levels with a defined risk above the
resistance to position for a drop into new lows. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we conclude the week with the US PPI and the University of Michigan
Consumer Sentiment survey.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

There is a light extension to the narrow range today with the pair now clipping 1.0950. That being said, it is still keeping within a ~23 pips range only for the day. There are some large option expiries as well at 1.0930 and 1.0950 that should likely keep price action locked, before we get to US trading.

With that in mind, what is the chart telling us in the bigger picture?

I outlined some key fundamental developments in the pair yesterday here. And things haven’t changed whatsoever on the technical side as well.

EUR/USD continues to be pinned down near the 100-day moving average (red line) and that is the key support level in play currently. The level is seen at 1.0934 at the moment.

Hold above that and buyers are still hanging on to a small chance of a rebound. They would have to reverse sentiment in the near-term chart to convince of anything stronger. In that lieu, the 100-hour moving average is seen at 1.0957 and 200-hour moving average at 1.1000. So, there is some work to be done.

Otherwise, the downside pressure continues to persist with the momentum siding with sellers. But they have some key levels to chew through themselves now as the week winds down.

The 100-day moving average above is one before the 50.0 Fib retracement level of the swing higher since April, seen at 1.0907.

With the dollar having made a comeback in the last two weeks, it turns trading sentiment towards one key question now. Which economy will fare better in the next three to four months; the US or the Eurozone?

The answer to that is likely to fuel the next key directional move in EUR/USD, guided by the technicals.

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