Prior to the Eurozone interest rate decision, the EURUSD pair exhibited considerable strength. Even on the day the decision was announced, there were doubts about whether a decline would occur. However, following the ECB decision, the pair lost its strength, at least by the next day.
Time Frame D1
On the D1 chart, we have seen a strong downward movement in recent days, interrupted by a one-day rise when weaker-than-expected US labor market data was published. In total, weaker US labor market data was released twice, but in one instance, the breakout was extinguished during the session. Additionally, long-awaited weaker CPI data for the Dollar in the US emerged.
It appears that EURUSD will be searching for a bottom where it may consolidate for a while. The question is whether this will be at the level of the recent support or if it will drop lower. Investors will be waiting for confirmation of whether inflation has indeed decreased and the condition of the labor market, which will not be clear until the beginning of next month.
Time Frame H1
On the H1 chart, we observe a significant drop below the 200SMA, followed by a retracement towards the moving average, driven largely by weak data from the US. Upon reaching the moving average, a strong decline resumed. During the second downward movement, negative news for the US dollar hit the market, specifically inflation data slightly below consensus. However, the attempt to rise after the data release quickly failed.
Looking at the D1 chart, it seems that EURUSD might draw a few more bearish candles. The H1 interval warns that there might be another attempt to rally towards the moving average. Friday was better for the EUR, with a correction in the latter part of the day following the declines. On Tuesday, the publication of the CPI from the Eurozone could provide strength for an upward movement.
Time Frame M30
On the M30 chart, we see that the first two corrections of the latest downward movement, if any, are almost flat. It is only around the 1.067 level that we observe two strong reactions. Bulls prevented further declines. It is evident that the 1.067 level is becoming attractive for EURUSD buyers. The upward movement could be significant if the Fed starts to cut interest rates.
However, until that happens, a lot can still occur, and for now, the game seems to be about declines, at least until there is more substantial confirmation (such as a drop in US CPI).
Economic Calendar for Next Week:
Key data that could make an impact includes Tuesday's US retail sales data. Wednesday will bring CPI data from the UK, a day before the interest rate decision (UK). On Thursday, SNB and BoE will announce their interest rate decisions, and on Friday, we have PMI data from the US.
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