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A late recovery last Friday allowed the euro to improve its ranking. Even so, the euro still closed out the week as a net loser. And the euro’s poor performance was thanks to ECB Overlord Draghi refraining to provide hints on when the ECB’s QE program will end, which then likely put monetary policy divergence into play.

However, there are medium-tier Euro Zone data on the docket this week. And they may allow the euro to regain some poise.

Tariff exemption expiry (May 1)

The E.U. was granted a temporary exemption from Trump’s tariffs. However, that exemption is set to expire on May 1. And so far, there are no hints if the E.U. will be able to secure an extension or even a permanent exemption.

Trump’s tariffs target raw materials, namely aluminum and steel, so the tariffs shouldn’t be that big of a deal for the Euro Zone since the Euro Zone’s main exports are finished goods such as cars.

Even so, this event is worth tracking.

Euro zone first GDP estimate (May 2, 9:00 am GMT)

As mentioned in the recap below, ECB Overlord Draghi started his presser by giving a cautiously optimistic assessment and outlook on the Euro Zone economy, which likely helped to push the euro higher as a knee-jerk reaction to the presser.

Traders will therefore likely be looking for confirmation of what Draghi was saying in last week’s ECB presser. And it just so happens that the Euro Zone will be releasing its  GDP figures this week.

And the consensus is that the Euro Zone economy only expanded by 0.4% quarter-on-quarter (+0.6% previous) and 2.5% year-on-year (+2.7% previous).

In other words, the Euro Zone economy is expected to grow at a slower yet still solid pace.

And if you can still remember last week’s ECB presser, Draghi said back then that:

The latest economic indicators suggest some moderation in the pace of growth since the start of the year. This moderation may in part reflect a pull-back from the high pace of growth observed at the end of last year, while temporary factors may also be at work. Overall, however, growth is expected to remain solid and broad-based.”

A weaker-than-expected reading may stoke expectations that the ECB won’t be chaning monetary policy anytime soon, though, which may weaken the euro.

Euro zone flash HICP readings (May 3, 9:00 am GMT)

The flash estimates for the Euro Zone’s HICP (their version of CPI) will be released mid-week.

And while the headline reading is expected to print another steady 1.3% year-on-year increase, the core reading is expected to dip slightly from +1.0% to +0.9%.

Traders probably want to see stronger numbers. After all, Draghi did say last week that:

“On the basis of current futures prices for oil, annual rates of headline inflation are likely to hover around 1.5% for the remainder of the year. Measures of underlying inflation remain subdued overall. Looking ahead, they are expected to rise gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion, the corresponding absorption of economic slack and rising wage growth.”

Last Week’s Price Review

The Euro

The euro is the third worst-performing currency of the week (as of 1 pm GMT), which is a reversal of fortune since the euro was the third best-performing currency last week.

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Forex Chart

The euro had a soft start, which pushed most euro pairs below last week’s closing prices. And market analysts attributed this early wobble mainly to Greenback strength and skittishness ahead of the ECB statement on expectations that ECB Overlord Draghi may try to sound cautious.

After that, the euro had a more mixed performance and traded roughly sideways. Although most EUR pairs remained below last week’s closing prices, with the exception of EUR/AUD, EUR/JPY, and EUR/NZD. That has more to do with weakness on the part of AUD, JPY, and NZD, rather than strength on the part of the euro, though.

Anyhow, the euro got slapped broadly lower when the ECB announced no changes to its monetary policy.

The euro later snapped back up when ECB Overlord Draghi began his presser with a cautiously optimistic assessment and outlook for the Euro Zone economy while also saying during the Q&A portion that:

“[T]he exchange rate stabilised and recent volatility is less. So it was not discussed.”

That statement is in response to a question about the lack of jawboning on the euro since the ECB has expressed concern about the euro’s volatility in the past.

In other words, the ECB is comfortable with the euro’s current levels, which likely promted some euro bulls to jump in.

However, the euro doubled back down later when a journalist asked about the ECB’s plans for June because “there is a lot of speculation that June may be the meeting where we’re going to get a roadmap from [ECB] for the second half of this year.” In particular, the journalist tried to ask about the ECB’s plans for its QE program.

And Draghi answered as follows:

“[W]e haven’t discussed that. It would be premature for me to make any comment about that.”

That likely disappointed traders who were expecting Draghi to give hints on when the ECB plans to change its monetary policy.

At any rate, tt was downhill for the euro from there. And most euro pairs (except EUR/GBP) continued to tilt to the downside on Friday.

The Swiss Franc

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Forex Chart

The Swissy is mixed for the week (as of 1 pm GMT). However, it’s worth noting that the Swissy is currently a net winner, which means that the Swissy’s five-week losing streak is finally over.

With that said, the Swissy had an early boost while the euro was having a hard time.

There was no clear reason for this and most (practically all) market analysts are silent on the Swissy’s bullish run on Monday. But as mentioned in Monday’s London session recap, it’s possible that market players were flocking to the safe-haven Swissy ahead of the ECB statement.

Another possible reason is short-covering. After all, the Swissy has been a net loser for the past five weeks.

In any case, the Swissy’s price action began to track the euro again after that. Although lingering disappointment over the ECB presser likely helped the Swissy to outperform the euro on Friday (and for the week for that matter), despite SNB Boss-Man Jordan’s Friday speech wherein he reaffirmed the SNB’s commitment “to intervene in the foreign exchange market as necessary” (*cough* currency manipulator *cough*) because the Swissy is supposedly still “highly valued.

NZD/CHF (inverted, red) vs.  EUR/NZD (black): 1-Hour Forex Chart
NZD/CHF (inverted, red) vs.  EUR/NZD (black): 1-Hour Forex Chart
GBP/CHF (inverted, red) vs.  EUR/GBP (black): 1-Hour Forex Chart
GBP/CHF (inverted, red) vs.  EUR/GBP (black): 1-Hour Forex Chart
USD/CHF (inverted, red) vs.  EUR/USD (black): 1-Hour Forex Chart
USD/CHF (inverted, red) vs.  EUR/USD (black): 1-Hour Forex Chart