Basic Overview
Yesterday, the US consumer confidence report surprised markets with the biggest decline since 2021. The labor market data in the report also fell significantly, and it generally leads the unemployment rate.
The market has responded by raising the odds of a 50 basis point Fed rate cut in November to about 60%. The question now is whether this is due to the weaker employment rate or something worse. We’ll have to wait for Friday’s nonfarm payrolls report.
On the euro front, the market has started pricing in a succession of ECB rate cuts in October following the latest eurozone PMIs where the data deteriorated more than expected. Moreover, ECB President Mueller opened the door to a rate cut in October, saying that it cannot be completely ruled out.
EURUSD Technical Analysis – Daily Time Frame
EURUSD daily
On the daily chart, we can see that the EUR/USD pair has risen back to the 1.12 level after a short sell-off following the Eurozone PMIs. From a risk management perspective, buyers will have a much better chance of taking risks versus rewards around the trend line, although a break of the high level is likely to increase bullish momentum. On the other hand, sellers are likely to step in around these levels to take a position down to the trend line.
Technical Analysis of EUR/USD – 4-hour time frame
EURUSD 4 hours
On the 4-hour chart, we can see that we have another minor trend line that defines the current bullish momentum. If we get a pullback, buyers will likely rely on the trend line to place a suitable position to move up to the 1.13 level. On the other hand, sellers will want to see the price drop to increase their bearish bets on the main trend line.
EURUSD Technical Analysis – 1-Hour Time Frame
EURUSD 1 hour
On the 1-hour chart, there is not much to add as buyers will be looking for a breakout to the upside to increase bullish bets to new highs, while sellers will be looking to step in around these levels to target a pullback to the trend line. The red lines mark the average daily range for today.
Upcoming incentives
Tomorrow, we get the latest US unemployment claims numbers, and on Friday, we wrap up the week with US CPI data.