We won’t be seeing a lot of top-tier economic reports this week, but something tells me that EUR/USD will see some action in the next trading sessions.
What do you think of EUR/USD breaking below a trend line support?
Before moving on, ICYMI, I’ve compiled all of last week’s major headlines and price moves. Be sure to check that out before you place your first orders of the week!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- China’s markets out on bank holiday
- Industrial production in Japan rises 2.9% in April
- Saudi first quarter GDP shrinks 3%, hit by oil sector decline
- Swiss producer and import prices up by 0.8% in May
- More support for businesses expected if UK delays lockdown easing – minister
- World stocks near record high as investors await dovish Fed act
- Dollar stands tall in big week for FX markets
Upcoming Potential Catalysts on the Economic Calendar:
- Eurozone’s industrial production at 9:00 am GMT
- Canada’s manufacturing sales at 12:30 pm GMT
- BOE Governor Bailey to give online speech at 1:00 pm GMT
What to Watch: EUR/USD
In case you missed it, EUR/USD has broken below a trend line support that had been valid since early April. And look! The pair is now trading below its 100 and 200 SMAs on the 4-hour time frame!
We won’t see a lot of top-tier reports printing in the next trading sessions, but I bet that at least some traders will price in the anticipated FOMC statement due on Wednesday.Surprisingly fast consumer price increases and other central banks talking tapering have upped the pressure on the Fed to reconsider its easy policies. But word around is that Governor Powell and his team will stick to their guns this month and keep to their inflation-is-temporary story at last for another month longer.
Hints of tapering or tightening in the foreseeable future would extend the dollar’s gains against the euro. EUR/USD could make new June lows and even hit the 1.2060 area of interest this week.
But if traders focus on the global economic recovery, or if the Fed successfully communicates its commitment to keep its monetary policies accommodative, then EUR/USD could bounce from its current levels and retest the descending channel resistance that we’re seeing on the 4-hour chart.