The euro slipped sharply on Wednesday, losing 76 pips as trading volumes rose alongside a modest 0.28% decline in the S&P 500. The move came after investors reassessed Federal Reserve Chair Jerome Powell’s remarks, realizing that the likelihood of two additional rate cuts this year is fading. While expectations for an October cut remain elevated at 97.4%, the probability of a December cut eased from 81.3% to 72.5%, helping lift U.S. Treasury yields and weighing on the euro.
Macro Backdrop: Data in Focus
Attention now turns to today’s U.S. economic releases:
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Durable goods orders (August): forecast -0.3%
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Q2 GDP final estimate: unchanged at 3.3% y/y
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Weekly jobless claims: expected to rise from 231k to 233k
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Core PCE (Q2): forecast 2.5%, down from 3.5%
While these data points will provide fresh signals, they are unlikely to reverse a market increasingly trading in “crisis correlation” mode—where risk aversion favors the dollar and pressurizes the euro.
Technical Outlook
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Daily Chart:
The euro is now testing critical support at the MACD line (1.1717). A daily close below this level would confirm a bearish breakout, exposing downside targets at 1.1605, followed by 1.1495 (the June 5 high).
The Marlin oscillator is close to dipping into bearish territory, hinting at growing downside pressure, though confirmation will likely require additional consolidation. -
Four-Hour Chart:
Price remains below both indicator lines, confirming a bearish structure. The Marlin oscillator is still in negative territory, though edging higher, suggesting short-term consolidation may precede the next decisive move.
Trading Implications
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Bearish Scenario: A close below 1.1717 opens the path to 1.1605 and potentially 1.1495.
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Bullish Scenario: Stabilization above 1.1717 and stronger-than-expected U.S. data could trigger a rebound toward 1.1820, though momentum remains weak.
For now, market sentiment favours the downside, with traders awaiting today’s U.S. releases for confirmation.
