Fundamental
Overview

The USD has been under some
pressure in the last couple of weeks as the weaker US data and the selloff in
the US stock market increased the expectations for more easing by year-end with
the market now fully pricing in three rate cuts.

Today we get the US CPI
report and it could be a tricky one for the US Dollar. Logically one would
expect more weakness for the greenback in case we get a soft report, but we
might even see a counterintuitive short-term appreciation on a relief rally in equities.

A hot report, on the other
hand, might give the greenback a boost against the major currencies on risk-off
flows although even here we could see the US Dollar depreciating amid falling
long term Treasury yields with the market expecting the Fed holding off from
cutting even in the face of more economic slowdown and eventually leading to
more aggressive cuts.

On the EUR side, the market
recently scaled back the rate cuts expectations following the news of more
defence spending. The European yields spiked and boosted the Euro. Moreover,
the ECB speakers have been coming a bit less dovish recently as they’ve been
cautioning against cutting rates too fast.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that the EURUSD is testing the key swing level at 1.0933. This is where we
can expect the sellers to step in with a defined risk above the level to position
for a pullback into the 1.0630 level. The buyers, on the other hand, will want
to see the price breaking higher to increase the bullish bets into new highs.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the pair is trading inside a rising channel. The buyers will likely
lean on the lower bound to keep pushing into new highs, while the sellers will
look for a break lower to target the base of the channel around the 1.0765
level next.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much else we can add here as the buyers will want to lean on the bottom trendline to position for new highs, while
the sellers will look for a break lower to target the 1.0765 level next. Today
we have the US CPI report so from a risk management perspective, it would be
better to wait for the release before taking new positions. The red lines
define the average daily range for today.

Upcoming
Catalysts

Today we have the US CPI report. Tomorrow,
we get the US PPI data and the US Jobless Claims figures. On Friday, we
conclude the week with the University of Michigan Consumer Sentiment
report.