FundamentalOverview

The USD continues to besupported against most major currencies, especially the commodity currencies, asthe markets remain in a risk-off mood following some bad US data releases. Infact, since last Friday, we got weak US Flash Services PMI, UMichfinal Consumer Sentiment and yesterday a weak USConsumer Confidence report.

The problem is that we’vealso got inflation expectations jumping to new highs in both the UMich and the ConferenceBoard report. The market might be fearing that in case we get a slowdown, theFed might not be fast enough in cutting rates amid inflation remaining abovetarget and uncomfortably high long-term inflation expectations.

This is something to keepin mind in light of the next NFP and CPI reports coming out before the MarchFOMC decision where we will also get the updated SEP and Dot Plot.

On the EUR side, the ECBspeakers have been coming a bit less dovish recently as they’ve been cautioningagainst cutting rates too fast. Last week, we got the Eurozone PMIs which showed steady growthwith another pick up in the manufacturing index, which is more sensitive to thebusiness cycles. The market is expecting another 25 bps cut at the upcomingmeeting with a total of 81 bps of easing by year-end.

EURUSD TechnicalAnalysis – Daily Timeframe

On the daily chart, we cansee that the EURUSD is trading near the 1.0532 resistance. The sellers will likely step inaround these levels with a defined risk above the resistance to position for adrop into the 1.02 handle. The buyers, on the other hand, will look for a breakhigher to increase the bullish bets into new highs.

EURUSD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we have an upward trendline defining the bullish momentum.If we get a pullback into the trendline, we can expect the buyers to lean on itwith a defined risk below it to position for a rally into the 1.06 handle. Thesellers, on the other hand, will look for a break lower to increase the bearishbets into new lows.

EURUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, there’snot much else we can add here as the buyers will want to lean on the trendlineto position for new highs or wait for a break above the resistance, while thesellers will look for a break below the trendline to increase the bearish betsinto the 1.02 handle next. The red lines define the average daily range for today.

UpcomingCatalysts

Tomorrow we get the latest US Jobless Claimsfigures, while on Friday we conclude the week with the France CPI, the GermanCPI and the US PCE data.