The U.S. is printing its core PCE and ISM manufacturing reports!
Will the releases bust EUR/USD out of its triangle consolidation?
Before moving on, ICYMI, yesterday’s watchlist checked out AUD/CHF’s range bounce or break situation after Australia printed its CPI and China reported its PMI numbers. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Consumer-led rebound inspires upward revision of Q3 US GDP from 2.6% q/q to 2.9%
EIA: U.S. crude stockpiles plunge as refiners surge activity
Fed’s Powell: “moderating the pace of rate increases may come as soon as the December meeting”Powell: “we have a long way to go in restoring price stability”
Powell: terminal rate likely to be “somewhat higher” than the 4.6% estimates in September
Vice-premier Sun Chunlan: “China’s pandemic containment faces a new stage and mission”
AIG’s manufacturing index drops from 49. to 44.7, the first contraction in three months
Australia’s business investment dips by 0.6% q/q in Q3 vs. 1.5% uptick in Q2
China Caixin manufacturing PMI improved from 49.2 to 49.4 in November and marked its fourth contractionary reading in a row
Germany’s retail sales plunge by 2% m/m in October vs. -0.6% expected, 0.9% previous
Nationwide: UK house prices post 1.4% drop in November, the biggest slide since mid-2020
Swiss inflation remains at 3% in November
Asian FX bulls loom on signs of slowing Fed rate hikes, China reopening
Upcoming Potential Catalysts on the Forex Economic Calendar:
Spain’s manufacturing PMI at 8:15 am GMT
Switzerland’s manufacturing PMI at 8:30 am GMT
Eurozone’s unemployment rate at 10:00 am GMT
US Challenger job cuts at 12:30 pm GMT
US core PCE price index at 1:30 pm GMT
US initial jobless claims at 1:30 pm GMT
U.S. ISM manufacturing PMI at 3:00 pm GMT
AU retail sales at 1:30 am GMT (Dec 2)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: EUR/USD
With everybody and their momma focused on the Fed slowing down its interest rate hikes, you can bet that traders will check out today’s U.S. economic releases for more catalysts!
I got my eyes on the U.S. core PCE report – the Fed’s preferred inflation gauge – which is expected to “confirm” the CPI report’s lower reading. If we do see lower growth figures, then more traders would price in “only” a 50bps Fed rate hike in December.Meanwhile, the employment component of ISM’s manufacturing PMI could give hints on what to expect from tomorrow’s NFP report.
More risk-taking (and dollar-selling) could bust EUR/USD from its triangle consolidation on the 4-hour chart.
As you can see, the pair is already testing the ascending triangle‘s resistance around the 1.0450 zone.
Breakout playas can aim for the 1.0500 or 1.0600 inflection points depending on how bullish EUR/USD’s momentum is.
But if today’s reports lead to a bit of profit-taking from yesterday’s dollar-selling, or if traders focus on the Fed possibly aiming for a higher terminal rate, then EUR/USD’s triangle resistance could hold.
A clear bounce from the 1.0450 levels could drag EUR/USD to the trend line support near the 4-hour chart’s 100 SMA.