EURUSD Technical Analysis - Watch these key levels | Forexlive

EURUSD Technical Analysis – Watch these key levels | Forexlive

Time Stamp: August 29, 2023 2:16 AM
Source Node: 2851383

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 missed
    expectations across the board last week, while the US Jobless Claims remained
    solid.
  • Fed Chair Powell’s speech at the Jackson Hole Symposium was
    mostly in line with what he said previously but he stressed on the need to be
    careful going forward and that continued strength in the labour market may
    require further rate hikes.
  • 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.
  • President Lagarde at the Jackson Hole Symposium
    didn’t signal much but she wasn’t as dovish as the market expected her to be.
  • The market expects the ECB to hike by 25 bps at the
    September meeting but that will likely depend on the upcoming CPI report.

EURUSD Technical Analysis –
Daily Timeframe

EURUSD Daily

On the daily chart, we can see that EURUSD has
bounced on the bottom trendline of the
major rising wedge pattern and it’s
now testing the previous support now turned resistance. The
bearish trend remains intact as the price keeps printing lower lows and lower
highs and the moving averages are
crossed to the downside. From a risk management perspective, the sellers may
want to wait for the price to pull back into the downward trendline where they
will also find the confluence with the
red 21 moving average. The buyers, on the other hand, will need the price to
break through the trendline to switch the bias from bearish to bullish and
target new higher highs.

EURUSD Technical Analysis –
4 hour Timeframe

EURUSD 4 hour

On the 4 hour chart, we can see that we’ve been diverging with the
MACD for a
while as the price has been approaching the bottom trendline of the wedge. This
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In fact, this is a key spot for the pair as a break lower would open
the door for a fall into the 1.05 handle. The price is now getting rejected
from the previous support now turned resistance and the black trendline as the
sellers are positioning for a break lower. If the price turns around and breaks
above the 1.0832 level, we can expect a quick rally into the major trendline
where we have also the 38.2% Fibonacci retracement level
and the previously mentioned daily 21 moving average.

EURUSD Technical Analysis –
1 hour Timeframe

EURUSD 1 hour

On the 1 hour chart, we can see more
closely the rejection from the resistance zone around the 1.0832 level. If the
price breaks above the resistance, the buyers are likely to pile in to position
for a breakout of the major trendline. The sellers, on the other hand, will
want to see the price to continue lower and break below the bottom trendline of
the wedge to pile in even more aggressively and target the 1.05 handle.

Upcoming Events

This week is an important one given that we will see
many key labour market data for the US, including the NFP, before the next FOMC
meeting. We will also get the latest Eurozone CPI data which is likely to
decide whether the ECB is going to hike in September or pause. Today, we have
the US Consumer Confidence and the US Job Openings reports. Tomorrow, we have
the US ADP report. Moving on to Thursday, we will have the Eurozone CPI, the US
Jobless Claims and the US PCE data. Finally, we conclude the week with the US NFP
and the ISM Manufacturing PMI on Friday. Although the Fed keeps all the options
on the table, it’s also leaning more towards a pause in September, so we will
need strong data to make the market to expect a hike at the upcoming meeting.
Likewise for the ECB, a strong CPI report will seal the rate hike at the
September meeting.

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