The pressure is back on the euro now as traders are rebuffing expectations for a rate cut by the ECB in October. That comes after Rehn was out saying that the scale is tipping towards that now, at least in his view. It’s the first sign of any ECB policymaker confirming the recent shift in market pricing.

EUR/USD is down and while that also is in part due to the dollar keeping steadier, the euro is not finding much cheer elsewhere. EUR/JPY is down 0.3% to 159.40 levels and EUR/CHF down 0.2% to 0.9393. Both are also trading to fresh session lows currently.

In the case of EUR/USD, there are large option expiries at 1.1100 that could anchor price action a little.

But from a technical perspective, the downside momentum is starting to build. The minor support around 1.1121-25 has given way and now the key 4-hourly moving averages are starting to crack as well as seen above.

For now, the euro side of the equation has cast its vote. It’s now down to the dollar side of the equation to follow that up later.

When Wall Street enters, we’ll have the US ISM manufacturing PMI and JOLTS job openings to work through.

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

The US Dollar got a bit of
a boost yesterday as Fed Chair Powell reiterated that 50 bps of easing by year end
remains the base case. The market’s probability for the Fed to cut by 50 bps in
November fell from 51% to 40%.

Moreover, overnight the BoJ Summary of Opinions showed that the proponents for rate
hikes were more inclined to wait and monitor the developments in the overseas
economies and markets.

This week is a big one as
we get the US ISM Manufacturing PMI today and the US NFP report on Friday.
Positive data will likely see the pair drifting higher on rising Treasury
yields, while weak figures should keep the bearish momentum going.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY rallied back to the trendline and it’s now consolidating as we
await the key US data. The buyers will likely pile in around these levels to
position for a rally into the 150.00 handle, while the sellers will want to see
the price falling back below the trendline to keep pushing towards new lows.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a resistance
zone around the 145.50 level where the price got rejected from several times in
the past weeks. This is where the sellers are stepping in with a defined risk
above the resistance to position for a drop into the 140.00 handle. The buyers,
on the other hand, will want to see the price breaking higher to position for a
rally into the 150.00 handle.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the rejection from the resistance zone as the sellers are
trying to build some momentum to the downside. The US ISM Manufacturing PMI
today will be a key report as strong data will likely trigger a rally, while
weak figures should increase the bearish momentum. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US ISM Manufacturing PMI and the US Job Openings data.
Tomorrow, we have the US ADP report. On Thursday, we get the latest US Jobless
Claims figures and the US ISM Services PMI. Finally, on Friday, we conclude the
week with the US NFP report.

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

• Prior +2.2%
• Core CPI +2.7% vs +2.7% y/y expected
• Prior +2.8%

The readings are as expected with headline annual inflation ticking below 2% for the first time since 2021. That said, core annual inflation only eased ever so slightly to 2.7%. So, that’s still the bigger focus with services inflation continuing to sit higher mostly. But all of this just rebuffs market expectations for an ECB rate cut in October. And Rehn’s comments earlier are also supportive of that.

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