Key Points
- EURUSD holds onto CPI gains
- FOMC Minutes & PMI Looms
- Has the dollar bottomed out?
- EURUSD is trading around a crucial high level.
EURUSD Holds Onto CPI Gains
In what has been a quiet start to the week, Friday’s CPI report, a significant economic indicator, remains a hot topic among traders and investors. The markets reacted with a mix of relief and anticipation when the report was released on Friday, interpreting it as a dovish print as stocks surged and the US dollar weakened.
Although the dollar rebounded late on Friday, EURUSD has held onto most of the gains seen since last week. This suggests some strength in this market as we approach the busier part of the week.
FOMC Minutes & PMI Day Looms
This week’s volatility will likely begin on Wednesday as the FOMC meeting minutes are set to be released. This will provide traders with a detailed record of the FOMC’s most recent meeting, where “higher for longer” ruled the roost once more. Despite rate cut expectations seemingly being pushed back consistently, the markets are now at ease with this. As long as inflation continues to fall, traders will keep believing the soft landing narrative.
On Thursday, high-impact data in the form of the Purchasing Managers’ Index (PMI) will directly impact both the Euro and the US Dollar. This data, which provides insights into the health of the services and manufacturing sectors, could trigger significant market movements. While both the Manufacturing and Services PMIs are currently showing expansion, a reading that indicates contraction could lead to further EURUSD gains.
EURUSD Trades At Key High
EURUSD has been gaining on the daily time frame since the low was created on April 16th. This gain has represented around 300 pips or 2.8%, and now we are in a very intriguing position heading into Wednesday and Thursday.
The EUR/USD daily chart above shows the daily “MS Low” and “MS High” marked, representing the current market structure. The price threatened to close above the MS High on Thursday last week but created a liquidity grab. Yesterday, the high was tested again.
Something is going to give sooner rather than later, and if there is a full-body candle closure above the MS High, then this market becomes technically “bullish.” From here, traders may look for a golden crossover between the 50, 100, and 200-day moving averages for an extra confluence of a bullish market.
Alternatively, traders may want to validate Thursday’s wick as a liquidity grab by utilising a lower time frame bearish break of structure. If this occurs, we could see EURUSD fall back inside the current market structure. How deep this would go depends on the strength of the US data that is due out.
Related Articles:
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
