EUR/USD
On Thursday, the US S&P 500 decreased by 0.29% (Russell 2000 -1.96%), the yield on 5-year US government bonds rose from 4.19% to 4.29%, and the dollar index increased by 0.58%. The euro lost 63 pips in a day.
We expect the euro to fall below 1.0724 and even 1.0450 (the October 2023 low), but the current reversal seems a bit premature; we can confirm its strength from the levels of 1.1001/10. If today closes with a black candle and the price consolidates below the MACD line, the target of 1.0796 automatically opens up. After that the second target will be 1.0724.
So why did the market fall? The reason was the Producer Price Index (PPI) data. The PPI increased from 1.0% YoY to 1.6% YoY, while the Core PPI inflation stayed put at 2.0% YoY. Investors were encouraged - if the hawkish Federal Reserve doesn't opt for three rate cuts this year, as was the case at the last extended meeting, but chooses to do it only twice, then there is a probability that it will show a tougher stance than the European Central Bank.
Also, other data may indirectly deter the Fed from a faster pace of rate cuts: retail sales in February increased by 0.6%, initial jobless claims were 209,000 against the forecast of 218,000. For these reasons, we are not in a hurry to talk about a reversal before the results of the Fed meeting. The stock market can easily rise on optimistic data, and it's not certain that the euro won't prefer risk even if the central bank tightens its rhetoric. Therefore, if the price consolidates above 1.0905, then there's a 90% chance that it will reach the target range of 1.1001/10.
The four-hour chart shows a bearish situation; the price has consolidated below the level of 1.0905, below the balance and MACD lines, the Marlin oscillator has already settled on the downward half and is pushing the price towards new bearish targets. We are waiting for the FOMC Fed meeting on Wednesday, March 20th.