EUR/USD: ECB and a packed US data could wane the optimism

EUR/USD is awake, alive, and kicking, hitting the highest in two months. The all-important ECB decision and potentially another devastating US jobs report are in the spotlight next week, Yohay Elam, an FXStreet analyst, reports.

Stay up to speed with Yohay Elam's last EUR/USD technical analyisis

Key quotes

“A new month brings new easing of restrictions in several countries and also an opportunity to take stock of any setbacks. Reports about new clusters – as seen in South Korea – may weigh on the euro. Accelerating the reopening, as suggested in Spain, may boost the common currency.”

“The ECB will likely leave the deposit rate unchanged at -0.50% but may opt to enlarge its QE scope. The most recent Pandemic Emergency Purchase Program is worth €750 billion and may run out of cash in the autumn.”

“The ECB is due to publish new growth and inflation forecasts, as it does every three months – yet some suspect the publication will be suspended because of extreme uncertainty. A gloomier forecast would justify more action, yet painting a dark picture without shedding light – announcing new stimulus – would weigh on the euro.”

“Ongoing success in flattening the curve may boost sentiment and push the dollar down, while if COVID-19 rears its ugly head, the greenback may find demand.”

“If Hong Kong entirely falls under Beijing's control, investors will shrug it off as long as financial activity remains unharmed. Any hints of severing ties may boost the greenback.”

“Nonfarm Payrolls will probably show another massive, multi-million decrease in employment, yet probably better than April's 20.5 million. A significant downward revision for April cannot be ruled out, somewhat dampening any positive surprise in May's numbers.”