The last week on the forex market was marked by strong expectations for the FED to start a rate-cutting cycle. A -0.1% drop in CPI and weaker, mixed labor market data were enough for major currencies and gold to gain strength and reach new highs. Investors have long been awaiting such a decision from the FED.
Yesterday's speech by Powell did not provide an additional boost as it contained no hints, with decisions to be made in meetings based on current data. On the other hand, today's release of ZEW data on the Eurozone and Germany's economy was at least weak.
Time Frame D1
Smart Money likely made significant purchases and, if they decide to sell, will do so on higher liquidity (though further upticks are possible). The test will be today's trading session in the US. If profit-taking begins, the first resistance is at the 50/200 SMA level (both averages are at the same level). However, the more likely level, if there is a sell-off, is the recent low on D1.
Currently, poor data from Europe has not triggered profit-taking, and the EUR/USD rate remains close to the level at the time of publication. However, maintaining the rate at its current level is becoming increasingly difficult.
Time Frame H1
The H1 chart shows that the first possible resistance is at 1.081, but in the case of a sharp sell-off, the target will likely be 1.070. Alternatively, a new, higher low may form between these levels. Expectations for a FED rate cut are very high, and the rate could quickly rebound after a sell-off.
Key data this week includes today's US retail sales figures, tomorrow's UK and Eurozone CPI data, and Thursday's Eurozone interest rate decision.
Time Frame M15
On the M15 chart, trading on EUR/USD is slowly moving below the 200 SMA. Buyers are trying to maintain the rate at its current level, which seems likely at least until the US retail sales data is released. The data is expected to be mixed: retail sales m/m to drop by -0.3%, and core retail sales m/m to rise by 0.1%.
Tomorrow's UK and Eurozone CPI data are expected to show a slight annual decline in inflation. The market consensus for the ECB decision is to leave rates unchanged.
Economic Calendar
Key data that may affect the market:
Tuesday: US Retail Sales (June),
Wednesday: UK CPI (June),
Wednesday: EUR CPI (June),
Thursday: EUR ECB Interest Rate Decision.
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