July 04, 2024 at 10:32AM
Fundamental
Overview
The USD yesterday weakened
across the board following soft US
Jobless Claims and ISM
Services PMI reports. Overall, the data didn’t change much in terms of
interest rates expectations, but it reinforced the view that the Fed is going
to deliver at least two rate cuts by the end of the year.
The EUR, on the other hand,
has been under pressure mainly due to the US Dollar strength last week which has
been influenced more by quarter-end flows rather than something fundamental.
This week, the US Dollar is back on the defensive as the market continues to trade
the soft-landing narrative.
Moreover, the Euro has
found some support from the latest developments on the French elections front as
Politico
reported that hundreds of candidates from Macron’s camp and the left-wing
alliance withdrew in an effort to keep the National Rally out ahead of the
second round of voting this weekend.
EURUSD Technical
Analysis – Daily Timeframe
On the daily chart, we can
see that EURUSD broke out of the consolidation beneath the key 1.0727 level, and
after a brief retest, extended the rally into the 1.08 region helped by the
weak US data.
The buyers will now want to
see the price breaking above the 1.0812 level to increase the bullish bets into
the 1.09 handle next. The sellers, on the other hand, will likely step in
around this level to position for a break below the 1.0727 support
with a better risk to reward setup.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the breakout of the recent descending
triangle-like consolidation, the retest of the 1.0727 level where we had
also the minor upward trendline
for confluence,
and then the rally into the 1.0812 resistance.
If we get a pullback from these
levels, we can expect the buyers to lean on the trendline again to position for
a break above the 1.0812 resistance with a better risk to reward setup. The sellers,
on the other hand, will want to see the price breaking below the trendline and
the 1.0727 support to increase the bearish bets into the 1.06 handle next.
EURUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have an interesting support zone around the 1.0775 level where we can
find the confluence of the previous swing high, the 50% Fibonacci
retracement level and another minor trendline.
This is where we can expect
more aggressive buyers to step in to position for a break above the 1.0812 resistance
with a better risk to reward setup. The sellers, on the other hand, will want to
see the price breaking lower to increase the bearish bets and provide the
pullback into the next minor trendline around the 1.0750 level. The red lines
define the average daily range for today.
Upcoming
Catalysts
Tomorrow we conclude the week with the US NFP report where the data is expected
to show 180K jobs added in June and the Unemployment Rate to remain unchanged
at 4.0%.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
