EUR/USD is knocking on an intraweek inflection point ahead of the U.S. core PCE price index report.
Will we see an upside breakout today? Or will the bears continue to limit the euro’s gains?
Before moving on, ICYMI, yesterday’s watchlist looked at EUR/JPY’s downtrend ahead of the ECB statement. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
European Central Bank held the deposit rate at 4.00%; said rate cuts may come mid-2024; showed concern for economic growth risks, cited inflation and wage growth downtrend
U.S. Advanced GDP read for Q4 2023: 3.3% q/q (2.3% q/q forecast; 4.9% q/q previous); GDP Price Index for Q4 2023: 1.5% q/q (2.8% q/q forecast; 3.3% q/q previous)
U.S. weekly initial jobless claims: 214K (119K forecast, 189K previous)
U.S. Durable Goods Orders for December: 0.0% m/m (0.1% m/m forecast; 5.5% m/m previous)
U.S. New home sales for December: 664K (648K forecast, 615K previous)
Australia’s markets out on bank holiday
Tokyo core CPI slowed from 2.1% y/y in November to 1.6% in December vs. 1.9% forecast
BOJ’s meeting minutes showed the members agreeing to discuss “issues such as the timing of an exit from the current monetary policy, and the appropriate pace of interest rate hikes thereafter”
GfK: U.K.’s consumer confidence index hit a two-year high of -19 (from -22) in January as inflation cooled
GfK: Germany’s consumer climate index plummeted to -29.7 (from -25.4) in January as income expectations, willingness to buy, and economic expectations all weakened
Price Action News
Overlay of CHF vs. Major Currencies Chart by TradingView
The U.S. dollar, Japanese yen, Swiss franc, and the New Zealand dollar all saw increased volatility during the Asian and early European sessions.
USD may have lost pips from Fed interest rate cut bets; JPY was likely weighed by overall risk-taking, and the New Zealand dollar possibly suffered from traders second-guessing the positive impact of China’s latest stimulus plans.
The Swiss franc had a more interesting day. CHF was trading inside intraday ranges until the start of the European session when it was boosted higher. There are no direct catalysts for the move, though the safe-haven may have gained buyers after Germany’s consumer confidence report showed deep declines.
Upcoming Potential Catalysts on the Economic Calendar:
U.S. PCE price index at 1:30 pm GMT
U.S. personal income and spending at 1:30 pm GMT
U.S. pending home sales at 3:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
EUR/USD: 15-min
EUR/USD 15-min Forex Chart by TradingView
EUR/USD is knocking on an important short-term inflection point!
In case you missed it, traders are NOT too happy about the ECB saying that it’s too early to talk about interest rate cuts and that risks to economic growth are “tilted to the downside.”
Then again, USD isn’t doing so well either. A much better-than-expected GDP reading and expectations of a weaker core PCE price index growth have attracted tons of risk-takers and USD-dumpers.EUR/USD, which has found an intraweek bottom at the S1 (1.0810) Pivot point line, is now trading closer to the 1.0850 psychological level. Take note that EUR/USD’s current prices are not too far from the 15-minute chart’s 100 SMA, Pivot Point (1.0860) line, and a support zone from the previous week.
Let’s see whether we get an upside breakout or a bearish rejection today. Based on our U.S. core PCE Price Index Event Guide, traders are expecting a slightly faster pace for U.S. price growth in December.
Stronger price pressures could limit Fed rate cut bets and draw in USD buyers. EUR/USD could get rejected from the inflection point that we’re watching and attract enough sellers all the way to the S1 Pivot Point or the 1.0800 psychological level.
