- The Fed left interest rates unchanged as expected, while dropping the tightening bias in the statement but adding slight resistance to a rate cut in March.
- Fed Chairman Powell stressed that he wants to see more evidence of inflation returning to target and that a March rate cut is not his base case.
- The latest US GDP far exceeded expectations.
- US PCE was broadly in line with expectations, with the 3- and 6-month core annualized rates falling below the Fed’s 2% target.
- The US NFP report far exceeded expectations across the board.
- The ISM manufacturing PMI surprised on the upside with the new orders index, considered a leading indicator, returning to expansion. Likewise, the ISM Services PMI exceeded expectations across the board, with the employment subindex erasing the previous decline and prices paid surpassing 60.
- The U.S. consumer confidence report was in line with expectations, but labor market details improved significantly.
- The market now expects a first rate cut in May.
- The ECB left interest rates unchanged as expected, retaining the usual data-dependent language.
- The recent Eurozone CPI is in line with expectations, with the disinflationary process remaining stable.
- The labor market remains historically tight, with the unemployment rate at historically low levels.
- Eurozone PMIs beat expectations on the manufacturing side, but missed on the services side, with both measures remaining in contraction.
- ECB members have recently pushed back against aggressive rate cut expectations.
- The market expects the ECB to cut rates in April.
EURUSD Technical Analysis – Daily Timeline
On the daily chart we can see that EURUSD rebounded from the key support area at the 1.0723 level and moved back into the blue moving average of 8 where it began to consolidate as sellers began to ‘pile up. best resistance zone around the trendline as there is also the red moving average 21 for the confluence. Should the pair extend the rally to the trendline, we can expect sellers to pile in even more aggressively. Buyers, on the other hand, will want to see the price move higher to invalidate the bearish setup and start targeting the 1.10 handle.
EURUSD Technical Analysis – 4 hour time frame
On the 4-hour chart, we can see that the pair is trading inside an ascending channel which could end up being a bear flag if the price continues to fall. We can notice that sellers continued to intervene around the previous low level, where we also have the 38.2% Fibonacci retracement level for the confluence. Buyers will need a strong catalyst to break through this resistance. Sellers, on the other hand, will want to see price decisively break the downtrend channel to increase bearish bets and target new lows.
EURUSD Technical Analysis – 1 Hour Timeframe
On the hourly chart we can see that price is breaking through the channel but finding some support around the most recent low at 1.0756. Today’s US CPI report will be a big catalyst and we will definitely see strong moves thereafter, so pay attention to today’s data as it will likely decide which direction the pair takes in the next weeks.
Events to come
Today we have the main event of the week, the US CPI report. On Thursday we will see the latest figures for US jobless claims and US retail sales. Finally, on Friday we wrap up the week with US PPI data and the University of Michigan Consumer Sentiment Survey.