The Fed has
eventually paused at the last meeting keeping interest rates at 5.00-5.25%.
They did so because they want to see more economic data before deciding on
another hike as they are trying to find the optimal level of monetary restraint
to bring inflation down to target without too much pain for the economy.
The ECB, on the
other hand, raised interest rates by 25 bps as expected and hinted to another
hike in July. ECB speakers have also confirmed the upcoming rate hike and
signalled another one in September if conditions suggest such a move. This has
created a bit of policy divergence between the Fed and the ECB, ultimately favouring
the Euro.
EURUSD Technical
Analysis – Daily Timeframe
EURUSD Daily
On the daily chart, we can see that the EURUSD has
erased almost all the losses seen in May and it’s now back to the 1.0941 resistance. Last
week the price overextended as depicted by the distance from the blue 8 moving average.
Generally, we can see some consolidation or a pullback into the moving average
before the next move. The trend remains bullish as the moving averages are
crossed to the upside and the price keeps making higher highs and higher lows.
EURUSD Technical Analysis –
4 hour Timeframe
EURUSD 4 hour
On the 4 hour chart, we can see that the EURUSD is
pulling back at the moment and it’s finding some support on the red 21 moving
average. From a risk management perspective, the buyers would be better off
waiting for the price to fall into the trendline where we
can also find a previous swing high level, the 50% Fibonacci retracement level
and the daily 8 moving average for confluence. This
would be a good support zone where they can lean on with a defined risk just
below it and target the 1.1033 high.
EURUSD Technical
Analysis – 1 hour Timeframe
EURUSD 1 hour
On the 1 hour chart, we can see that the
trend on this timeframe is bearish as the moving averages are crossed to the
downside and the price is making lower lows and lower highs. Unless the price
rallies and breaks above the 1.0941 resistance, we can expect the EURUSD to
fall into the trendline. The sellers, on the other hand, can either lean on the
1.0941 resistance with a stop above the recent high or wait for the price to
break below the trendline to target the 1.0779 support.
This week
is pretty bare on the data front but we will have some important events to keep
an eye on starting with Fed Chair Powell’s testimony on Wednesday, the US
Jobless Claims on Thursday and concluding with the US PMIs on Friday.
