Euro Weekly Predict: Inflation-Rich Week for EUR/USD

Nov 6

VOT Research Report

Analytics and Recommendations

Fundamentals for the Eurozone are uncertain, but not sufficient to stop the USD’s current bull run.

Next week’s topic will be inflation.

Fundamental uncertainty is echoed by technical analysis.

The better-than-expected October services PMI number and somewhat hawkish remarks from ECB President Christine Lagarde were among the fundamental factors that helped the euro toward the end of last week. Christine Lagarde referred to historical trends in her statement on Friday that demonstrate slowing GDP has little impact on inflationary pressures.

Once more, the point was underscored: use every option at your disposal to lower inflation to the 2% target level. U.S. Non-Farm Payroll (NFP) statistics were revealed around the conclusion of the European session, and while employment exceeded forecasts, unemployment came in higher than expected. This is what markets eventually responded to, driving the euro stronger.

The warmer in the eurozone has contributed to decrease energy prices and is predicted to continue throughout November and possibly December. The price drop should give the EUR more support versus the USD, but it does not lessen the impact of the region’s other economic problems. Germany’s manufacturing orders fell -4% MoM, escalating concerns about a recession and restricting the euro’s potential for growth.

Thinking forwards, the economic calendar for the euro is centered by German CPI and EZ retail sales, while the U.S. is concerned about inflation and consumer sentiment. Even if the week’s schedule is relatively light, given the current state of the world, the inflation data is almost as significant as the decision on interest rates. These releases can serve as a strong barometer for forward advice, as central banks like the Fed and ECB frequently point out how reliant they are on data.

EUR/USD ECONOMIC EVENTS

Bulls are challenging the critical point of intersection in around 0.9864 handle in the daily EUR/USD price action, but the Relative Strength Index (RSI) indicates market trepidation heading into next week. The absence of lateral bias at this stage, which allows for more volatility around next week’s economic events, is clearly reflecting the balance of push and pull factors.

Pivot Points– Weekly

Moving Averages – Weekly