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EURUSD Forecast: Charts Gear up for U.S. CPI Volatility Week

Article By: ,  Market Analyst
May 14, 2024 12:44 PM
  • EURUSD is poised for high volatility around the upcoming U.S CPI metrics
  • ECB Financial Stability Review is set to report updates over November’s fragile outlook

Following the latest U.S economic data, including a Fed rate hold and negative results from ISM Manufacturing PMI, ISM Services PMI, Non-Farm Payrolls, consumer sentiment, and advance GDP, the upcoming April CPI results are expected to cool down, poising bullish volatility on EURUSD charts, unless reported otherwise.

Volatile waves can be expected on the EURUSD charts starting from the upcoming Fed Powell speech on Tuesday, escalating towards Wednesday’s U.S CPI results, and ending with the Euro Financial Stability Review on Thursday.

The previous November 2023 Euro Financial Stability Review stood at a fragile outlook with the consequences of higher rates, geo-political risks, and macro financial uncertainties. The mentioned factors underwent significant changes in 2024, with rate cuts on the horizon, sentiment towards geo-political tensions easing, and a 0.3% economic expansion in the first quarter of 2024.

Looking at the technical perspective:

EURUSD Forecast: Euro Currency Index (EXY) – Daily Time Frame – Logarithmic Scale

Last week’s NFP results allowed the Euro Currency Index to break above its respected horizontal support/resistance line extending from November 2023, only to find a resistance connecting the lower highs of the chart since March 2024. The following resistance is broken again on the upside, highlighting bullish sentiment on the Euro currency.

EURUSD Forecast: EURUSD – 4H Time Frame – Logarithmic Scale

The latest negative U.S Non-Farm Payroll results boosted the EURUSD towards the 1.0812 high, from which it rebounded from the resistance line connecting the lower highs of the chart since March 2024. Following the positive U.S PPI results, volatility ignited on the chart and the EURUSD pair recorded new weekly highs above 1.0812. Both the smoothed and unsmoothed relative strength indices are trending above the 50 neutral zone, reflecting further bullish sentiment. The five-week uptrend can potentially meet the next resistance levels near the April and March highs, near 1.0870 and 1.0950 respectively. On the downside, a break below 1.0720 can revive bearish sentiment and meet the next potential support near 1.07 and 1.0670 on the short run, and 1.06 and 1.0530 on the long run.

With volatility expectations on the horizon, prices and economic data are followed one level at a time.


 

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