EURUSD: in a reversal mood
Major event during the previous week was the FOMC Meeting, held on 1st May. Market was closely watching Fed Chair Powell's speech, considering recent emerging inflation. The main question for the market was when the Fed will make the first move to cut interest rates? The Fed`s rhetoric has not changed much. They acknowledged that the inflation is slowly taking the up course, in which sense; they will keep current interest rates on hold. Currently, it is questionable whether the Fed will cut interest rates during the course of this year. The market is anticipating with a 54% probability the first rate cut in September, while the majority of market participants switched their expectations for December this year.
Non-farm Payrolls in April surprised the market with only 175K added jobs, while the expectations were at 243K for the same period. The unemployment rate in April was modestly increased to the level of 3.9%, from 3.8% posted for the previous month, and also expected by the market. Average hourly earnings were increased by 0.2% in April, a bit lower from 0.3% estimated by the market. ISM Services PMI in April was standing at 49.4, lower from market estimate of 52.0, while CB Consumer Confidence for the same month was at level of 97.0, and lower from estimated 104.0. ISM Manufacturing PMI for April was standing at 49.2, lower from expected 50.0.
The inflation rate preliminary for April in Germany is 2.2% on a yearly basis, a bit lower from the market forecast of 2.3%. Unemployment rate in Germany in April was 5.9%, unchanged from the previous month. The GDP growth rate in Germany flash for Q1 was standing at 0.2% a bit better from forecasted 0.1%. The GDP growth rate for the Euro Zone for the same period was 0.4% on a yearly basis, which was better from estimated 0.2%. Core inflation in the Euro Zone preliminary for April was 2.7%, a bit higher from 2.6% forecasted by the market.
At the start of the week right before the FOMC meeting, the market was favoring USD, where its highest weekly level reached 1.065 against Euro. However, the rest of the week the currency pair was traded in favor of Euro, where the highest weekly level reached was at 1.081 on Friday's trading session. Still, the eurusd is ending the week at the level of 1.076. The RSI entered into a clear path toward the overbought side, reaching the level of 53 as of the end of the week. Interestingly, moving averages of 50 and 200 days are still moving as one same line, still not providing a clear indication whether there has been a cross or not.
The market was initially set on three rate cuts during the course of this year, however, at this moment the question is emerging whether the Fed will have maneuver space to cut rates till the end of this year. The market is currently trying to find the equilibrium for this sentiment, in which sense, there might be further weakening of the USD. The resistance line at 1.08 was only touched on Friday`s trading session, which leaves the space for the market to clearly test it during the week ahead. In case of a short term reversal, the currency pair might reach the level of 1.07, however, at this point on charts, the support line at 1.067 looks far away.
Important news to watch during the week ahead are:
Euro: ECB monetary Policy Meeting Accounts
USD: Michigan Consumer Sentiment preliminary for May
Non-farm Payrolls in April surprised the market with only 175K added jobs, while the expectations were at 243K for the same period. The unemployment rate in April was modestly increased to the level of 3.9%, from 3.8% posted for the previous month, and also expected by the market. Average hourly earnings were increased by 0.2% in April, a bit lower from 0.3% estimated by the market. ISM Services PMI in April was standing at 49.4, lower from market estimate of 52.0, while CB Consumer Confidence for the same month was at level of 97.0, and lower from estimated 104.0. ISM Manufacturing PMI for April was standing at 49.2, lower from expected 50.0.
The inflation rate preliminary for April in Germany is 2.2% on a yearly basis, a bit lower from the market forecast of 2.3%. Unemployment rate in Germany in April was 5.9%, unchanged from the previous month. The GDP growth rate in Germany flash for Q1 was standing at 0.2% a bit better from forecasted 0.1%. The GDP growth rate for the Euro Zone for the same period was 0.4% on a yearly basis, which was better from estimated 0.2%. Core inflation in the Euro Zone preliminary for April was 2.7%, a bit higher from 2.6% forecasted by the market.
At the start of the week right before the FOMC meeting, the market was favoring USD, where its highest weekly level reached 1.065 against Euro. However, the rest of the week the currency pair was traded in favor of Euro, where the highest weekly level reached was at 1.081 on Friday's trading session. Still, the eurusd is ending the week at the level of 1.076. The RSI entered into a clear path toward the overbought side, reaching the level of 53 as of the end of the week. Interestingly, moving averages of 50 and 200 days are still moving as one same line, still not providing a clear indication whether there has been a cross or not.
The market was initially set on three rate cuts during the course of this year, however, at this moment the question is emerging whether the Fed will have maneuver space to cut rates till the end of this year. The market is currently trying to find the equilibrium for this sentiment, in which sense, there might be further weakening of the USD. The resistance line at 1.08 was only touched on Friday`s trading session, which leaves the space for the market to clearly test it during the week ahead. In case of a short term reversal, the currency pair might reach the level of 1.07, however, at this point on charts, the support line at 1.067 looks far away.
Important news to watch during the week ahead are:
Euro: ECB monetary Policy Meeting Accounts
USD: Michigan Consumer Sentiment preliminary for May
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