EURUSD Technical Analysis

June 17, 2024 8:50 am

Fundamental
Overview

The USD last week lost
ground across the board following the soft US CPI report as the market priced back in two rate
cuts by the end of the year. The moves were reversed soon after though as we
got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed expected just one cut for
this year despite the soft US CPI report.

Fed Chair Powell backpedalled on the projections nonetheless making
them a bit less worrying as the central bank remains very data dependent. The
rally in the US Dollar eventually picked up steam as the risk sentiment turned
more cautious.

The EUR, on the other hand,
got hit hard by the European elections as the political uncertainty
weighed on the sentiment and led to some increase in bonds risk premia and
selloff in European stocks. The drop in the pair led to a break below a key
support that eventually exacerbated the selloff.

EURUSD Technical
Analysis – Daily Timeframe

EURUSD Daily

On the daily chart, we can
see that EURUSD broke through the key 1.0727 support zone and increased the bearish momentum as the
sellers piled in more aggressively. If the sellers remain in control, the
next target should stand around the 1.06 handle. A break below the 1.06
handle would open the door for a drop into the key 1.05 level which is
basically the bottom of the range since late 2022.

EURUSD Technical
Analysis – 4 hour Timeframe

EURUSD 4 hour

On the 4 hour chart, we are
seeing a pullback which might end up in a break and retest pattern on the 1.0727
resistance where we can also find the 38.2% Fibonacci retracement level for confluence.

This is where we can expect
the sellers to step in with a defined risk above the resistance to position for
a drop into the 1.06 handle with a better risk to reward setup. The buyers, on
the other hand, will want to see the price rally back above the resistance to
gain more control and start targeting the trendline
around the 1.08 handle.

EURUSD Technical
Analysis – 1 hour Timeframe

EURUSD 1 hour

On the 1 hour chart, we can
see that we have also a minor downward trendline around the 1.0727 level which
should technically strengthen the resistance. A breakout to the upside should
increase the bullish momentum into the next trendline at the 1.08 handle. The
red lines define the average
daily range
for today.

Upcoming
Catalysts

Tomorrow we have the US Retail Sales and US Industrial Production. On Thursday, we
get the US Housing Starts and Building Permits data and the latest US Jobless
Claims figures. On Friday, we conclude the week with the Eurozone and US PMIs.

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