EURUSD: gearing for the FOMC meeting
The PCE indicator is currently the one that the market is closely watching, as an indication of a potential next move of the Fed when it comes to the interest rate decision. This index was published on Friday, indicating that the inflation, measured through PCE Index, was standing at the level of 2.5% on a yearly basis, which was fully in line with market expectations. On the other hand, the core PCE Index reached 2.6% in June, which was 0.1 percentage points higher from the market estimate. Durable Goods Orders dropped by -6.6% in June on a monthly basis, which was significantly lower from market estimated 0.3%. The GDP Growth Rate estimate for Q2 was standing at 2.8% for the quarter, which was higher from market expectations of 2.0%. The July Michigan Consumer Sentiment Index reached the level of 66.4, only a bit higher from 66 estimated by the market.
GfK consumer Confidence in Germany in August reached the level of -18.4, which is a bit better from forecasted -21. HCOB Manufacturing PMI flash for Jul for Germany was standing at 42.6, while the market was expecting a figure of 44. The same indicator for the Euro Zone reached the level of 45.6, a bit lower from estimated 46.1. The 10Y German Bund auction ended with a yield of 2.43%, which was lower from previously reached 2.63%. The Ifo Business Climate in Germany in July was standing at 87.0 a bit lower from market estimate of 88.9.
During the week the currency pair was mostly oriented toward the downside. The highest-lowest trading range during the week was 1.0950 and 1.0825. Released PCE data changed the course of the currency pair to the upside, where the eurusd finished the week at the level of 1.0857. The RSI clearly started its path toward the oversold market side, however, the path was stopped as of the end of the week, so the index reverted a bit to the level of 54. This is an indication that the market is currently rethinking the oversold market side. The most interesting developments were with MA 50 and 200 indicators. As of the end of the previous week, two lines were moving so close to each other, significantly increasing indication that the cross might occur soon. However, during the previous week they have started another round of divergence from each other. Based on indicators, it seems that the market indeed needs to rethink the moment of a trend change.
An interesting week is ahead of the financial markets, considering that the FOMC meeting will be held as of 31st July. At the beginning of the week, the markets will most probably digest the PCE data published on Friday, in anticipation of the Fed move. A higher level of volatility is almost certain at this moment, considering current market nervousness regarding Fed`s rhetoric and potential movements. As per current charts, there is a higher probability that the eurusd pair will return to the levels around 1.09 to test it for one more time. There is also some probability that 1.095 might be reached again. However, at this point, there is no indication that the pair might go above this level. On the opposite side, 1.085 might be tested once again. Certainly, this would be one of the weeks where traders precaution is advisable.
Important news to watch during the week ahead are:
Euro: GDP Growth Rate flash for Q2 for Germany and the Euro Zone, Inflation rate preliminary for July in Germany, Unemployment Rate in Germany for July, Inflation data for the Euro Zone in July,
USD: CB Consumer Confidence for July, Fed Interest Rate Decision and press conference after the FOMC meeting, ISM Manufacturing PMI for July, Non-farm payrolls for July, Unemployment rate in July.
GfK consumer Confidence in Germany in August reached the level of -18.4, which is a bit better from forecasted -21. HCOB Manufacturing PMI flash for Jul for Germany was standing at 42.6, while the market was expecting a figure of 44. The same indicator for the Euro Zone reached the level of 45.6, a bit lower from estimated 46.1. The 10Y German Bund auction ended with a yield of 2.43%, which was lower from previously reached 2.63%. The Ifo Business Climate in Germany in July was standing at 87.0 a bit lower from market estimate of 88.9.
During the week the currency pair was mostly oriented toward the downside. The highest-lowest trading range during the week was 1.0950 and 1.0825. Released PCE data changed the course of the currency pair to the upside, where the eurusd finished the week at the level of 1.0857. The RSI clearly started its path toward the oversold market side, however, the path was stopped as of the end of the week, so the index reverted a bit to the level of 54. This is an indication that the market is currently rethinking the oversold market side. The most interesting developments were with MA 50 and 200 indicators. As of the end of the previous week, two lines were moving so close to each other, significantly increasing indication that the cross might occur soon. However, during the previous week they have started another round of divergence from each other. Based on indicators, it seems that the market indeed needs to rethink the moment of a trend change.
An interesting week is ahead of the financial markets, considering that the FOMC meeting will be held as of 31st July. At the beginning of the week, the markets will most probably digest the PCE data published on Friday, in anticipation of the Fed move. A higher level of volatility is almost certain at this moment, considering current market nervousness regarding Fed`s rhetoric and potential movements. As per current charts, there is a higher probability that the eurusd pair will return to the levels around 1.09 to test it for one more time. There is also some probability that 1.095 might be reached again. However, at this point, there is no indication that the pair might go above this level. On the opposite side, 1.085 might be tested once again. Certainly, this would be one of the weeks where traders precaution is advisable.
Important news to watch during the week ahead are:
Euro: GDP Growth Rate flash for Q2 for Germany and the Euro Zone, Inflation rate preliminary for July in Germany, Unemployment Rate in Germany for July, Inflation data for the Euro Zone in July,
USD: CB Consumer Confidence for July, Fed Interest Rate Decision and press conference after the FOMC meeting, ISM Manufacturing PMI for July, Non-farm payrolls for July, Unemployment rate in July.
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