EUR/USD In Focus Ahead of E.U. CPI, U.S. NFP and Speeches

JFD Team JFD

Both Euro and U.S. dollar will be affected by news this week. Out of several sentiment indicators for the Euro area and the Markit PMIs on Thursday, interest will be paid to union’s inflation rate, coming out on Wednesday. The flash inflation rate for May is predicted to slow down from near ECB’s target, below but close 2%. The market expects it to fall to 1.5% again in May, after a pick up to 1.9% in April. ECB President Mario Draghi has two scheduled speeches today. Firstly, he will present an introductory statement at the quarterly hearing before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels, Belgium at 15:00 CET and secondly, he will speak about his capacity as Chair of the European Systemic Risk Board (ESRB) at the same event.

On the other hand, the U.S. dollar will be quiet today as U.S. has a bank holiday. However, later in the week, Fed’s Beige book on Wednesday and May’s NFP report on Friday will attract traders’ attention. Market participants expect Federal Reserve to raise rates in the next policy meeting in June by 84.2% according to CME FedWatch Tool, and a strong jobs report will support that scenario. Non-farm payrolls are expected to be 183K in May versus 211K in April while unemployment rate to rise slightly to 4.5% from 4.4%. The average hourly earnings are expected to rise only 0.2%, below last month’s increase of 0.3%.

EUR/USD Ended the Previous Week Near its Opening Level - Virtually Unchanged

The common currency pair has paused the strong bullish run over the last few trading sessions and has been developing within 1.1160 – 1.1265 channel. The EUR/USD pair remained virtually unchanged during this past week as it ended near its opening levels. The aggressive buying interest drove the price towards a fresh six-month high at 1.1265, however, now is moving slightly above the 1.1160 price level. This week, the common currency pair awaits the Friday’s U.S. job report which could affect the price action and if the data is weak it would be widely positive for the euro.

From the technical point of view, our expectation is a further incline until the 1.1300 strong psychological level. On the other side, a slip below the 1.1160 support level will open the way for the 1.1020 obstacle. Despite that, the three simple moving averages are still pointing to the upside signaling for upside movement. The RSI indicator dropped below the 70 level but is still following a positive path with some weak momentum.

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JFD Team

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