EUR/USD bulls are taking it on the chin after a hawkish Fed statement on Wednesday. Will the downside momentum continue with European business sentiment data ahead?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at USD/CHF ahead of the Fed meeting, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
Equity Markets Bond Yields Commodities & Crypto
DAX: 15506.74 +1.03%
FTSE: 7083.37 +1.47%
S&P 500: 4395.64 +0.95%
NASDAQ: 14896.85 +1.02% US 10-YR: 1.306% -0.018
Bund 10-YR: -0.326% +0.002
UK 10-YR: 0.797% -0.003
JPN 10-YR: 0.026% -0.01 Oil: 71.98 +2.11%
Gold: 1,766.90 -064%
Bitcoin: $43,338.50 +3.04%
Ether: $3,022.30 +4.63%
Fresh Market Headlines & Economic Data:
Dow rebounds more than 300 points from 4-day slide as Fed is not ready to remove stimulus yet
The Fed is evaluating whether to launch a digital currency and in what form, Powell says
Oil prices rise on U.S. stocks draw, rising fuel demand
U.S. home sales fall, house price inflation cooling
Evergrande domestic debt deal calms immediate contagion concern
House GOP squeezes Pelosi on bipartisan Infrastructure Bill
In August 2021, the Economic Sentiment Indicator (ESI) eased in both the EU and the euro area (-1.5 points)
Upcoming Potential Catalysts on the Economic Calendar
Australia Manufacturing & Services PMI at 11:00 pm GMT
France Business Confidence at 6:45 am GMT (Sept. 23)
Spain GDP at 7:00 am GMT (Sept. 23)
France Manufacturing & Services PMI at 7:15 am GMT (Sept. 23)
Germany Manufacturing & Services PMI at 7:30 am GMT (Sept. 23)
Euro Area Manufacturing & Services PMI at 8:00 am GMT (Sept. 23)
U.K. Manufacturing & Services PMI at 8:30 am GMT (Sept. 23)
Bank of England Monetary Policy Statement at 11:00 am GMT (Sept. 23)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: EUR/USD
On the one hour chart above of EUR/USD, we can see that the bears have been steadily winning out over the last week before the market consolidated ahead of today’s Fed’s statement. That trend was momentarily broken in the initial Fed reaction, but USD bulls took charge quickly as the number of Fed members grew that see the first rate hike happening in 2022. This will likely keep trader bullish on the Greenback in the short-term.
Coming up, we’ve got the latest business sentiment data from the Euro area in the upcoming London session, which tends to be a short-term catalyst for the euro. If we see these numbers disappoint as expected, the odds are pretty good the trend we see in the chart above has a further ways to go.
For those bearish on EUR/USD, watch out for the expected net weak business sentiment readings from Europe before considering a short position. If we’re able to get a bounce in EUR/USD ahead of the event, then look out for bearish reversal patterns around the falling trendline / previous consolidation area (around 1.1720 – 1740) as a signal to potentially take some risk.
For EUR/USD bulls, the odds are pretty low of EUR/USD rally in the upcoming session, but if we do get a big positive surprise from European business survey data, then watch for a break and sustained trading above the falling trendline before considering a long position. This would be a counter-trend play, but if the surprise is massively positive, the short-term momentum could take the pair up to the 1.1750 – 1.1800 range before it runs out of steam.
