FUNDAMENTAL
OVERVIEW
USD:
The US Dollar weakened
across the board on Friday after the US Supreme Court struck down Trump’s
reciprocal tariffs. The policy uncertainty is what is likely to have weighed on
the greenback because on net, not much has changed.
Trump has already imposed
new tariffs under a different law and USTR Greer has stated that the tariff
deals remain in place and they will be honoured. Moreover, the new levies
actually reduce the effective average tariff rate, so it could be a positive.
The dollar might stay on
the backfoot for now amid the uncertainty, but I don’t think the big picture
has changed much. The real risks remain a potential US-Iran military escalation
which could boost the greenback on severe risk-off mood or a hawkish repricing
on stronger US data which would have a positive effect on the USD.
EUR:
On the EUR side, nothing
has changed. As a reminder, the ECB held interest rates steady as widely
expected at the last meeting and kept the same data-dependent and
meeting-by-meeting guidance. The policymakers have eased the rhetoric on the
euro recently after the currency dropped below the 1.20 level against the
dollar.
The focus remains on
inflation as the central bank has repeatedly stated that it won’t respond to
small or short-term deviations from the 2% target. The data for now has been
positive with economic activity picking up and core inflation hovering just a
bit above target.
EURUSD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that EURUSD fell into a new monthly low
last week but eventually bounced back following the US Supreme Court decision.
There’s not much we can glean from this timeframe, so we need to zoom in to see
some more details.
EURUSD TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see the price broke above the downward trendline that was defining the bearish
momentum. The price is now retesting the broken trendline where we have also a
support zone around the 1.1805 level. This is where we can expect the buyers to
step in with a defined risk below the support to position for a rally into the
1.1927 level. The sellers, on the other hand, will look for a break lower to
pile in for a drop into the 1.17 handle 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 look for a bounce around the support, while the sellers will look for a
break lower. The red line define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow we have the weekly US ADP jobs data. On Thursday, we get the latest US
Jobless Claims figures. On Friday, we conclude the week with the German CPI and
the US PPI data. Also, keep watching out for US-Iran headlines.
This article was written by Giuseppe Dellamotta at investinglive.com.
