Fundamental
Overview
The USD performance this
week has been negative despite the decreasing December rate cut odds. We’ve
seen also other markets behaving in a strange way, so it’s hard to pinpoint
what is really driving the markets at the moment.
The focus now is of course
on the Fed and the US data ahead of the December FOMC meeting. The market
pricing is now showing a 50/50 chance of a cut in December, so the data will
have the final say.
I don’t think the September
NFP expected to be released next week is going to matter much if it’s soft
given that it’s old data, but a strong report might be taken as meaningful
because the market could think that conditions were already getting better in
September before the two rate cuts.
Therefore, I think the
November NFP is going to have the final say, which will hopefully get released
just before the FOMC meeting in December (we won’t get the November CPI in
time).
On the EUR side, nothing
has changed fundamentally. The ECB decision didn’t offer anything new and kept
everything unchanged. ECB policymakers continue to repeat that the current
policy is appropriate and that they won’t respond to small or shot-term
deviations from their 2% target. The recent Eurozone data has been supporting
the central bank stance as PMIs showed a rebound in economic activity and core
inflation remained at 2.4% Y/Y.
EURUSD Technical
Analysis – Daily Timeframe
On the daily chart, we can
see that EURUSD broke above the major trendline and extended the gains into the
1.1650 level as buyers increased the bullish bets. The bullish momentum remains
intact for now as we continue to wait for the key US data.
EURUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have an upward trendline defining the bullish momentum. The buyers
will likely lean on the trendline with a defined risk below it to keep pushing
into new highs. The sellers, on the other hand, will want to see the price
breaking lower to start targeting new lows.
EURUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can add here as the buyers
will look for a bounce around the trendline, while the sellers will look for a
break
