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Preliminary GDP readings and final CPI numbers are lined up from the region this week, along with a speech by head honcho Draghi. How might this impact EUR action?

Medium-tier data from top economies (starting May 15)

The big dawgs of the euro bloc are scheduled to release their preliminary GDP readings for the first part of the week, along with final CPI figures. While these don’t typically generate a strong impact on the shared currency, it’s helpful to take note of how the numbers turn out to gauge any potential changes in policy bias.
Also lined up this week are the ZEW economic sentiment indices from Germany and the entire region. Only small improvements are eyed for both, with the former expected to tick slightly higher from -8.2 to -8.0 and the latter to climb a notch from 1.9 to 2.0.

ECB Governor Draghi’s testimony (May 16, 1:00 pm GMT)

ECB head honcho Draghi is scheduled to step up to the podium mid-week, likely dropping some fresh beats on economic outlook and his monetary policy bias. ​
For the past few months, market participants have been hearing about the end of the QE program sometime this year, so any confirmation from the main man himself could boost the euro.

Last Week’s Price Review

The Euro

The yen continued to take hits and is now the second worst-performing currency of the week, allowing the euro to take its place as the third worst-performing currency of the week (as of 1 pm GMT). This marks the second week of net losses for the euro.

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

Despite the euro’s poor performance, the euro’s price action wasn’t really all that uniform. In fact, the only time that EUR pairs showed uniform price action was at the start of the week when the euro slipped across the board.

There were no apparent catalysts at the time, but as noted in Monday’s London session recap, the euro may have been tracking the slide in European bonds yields at the time. Although it’s also possible that the euro’s weakness may have been an extension of last week’s themes.

At any rate, the euro’s price action became a mixed mess after that. There were even clear instances of diverging price action on euro pairs, which implies that the euro was being pushed around by its peers.

As to why traders lost interest in the euro, there’s really no clear reason for that, and most market analysts are quiet on the issue.

However, it’s possible that traders were wary because of the political troubles in Italy. Another possible reason is the lack of major catalysts this week, as well as the Victory Day and Ascension Day holidays.

Yet another possible reason is that traders are reassessing their position on the euro since recent Euro Zone data haven’t been very supportive of the idea that the ECB may be tightening monetary policy soon.

The Swiss Franc

The Swissy is mixed for the week (as of 1 pm GMT) but a net winner overall, which means that the Swissy’s six-week losing streak may finally come to an end.

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

As usual, EUR and CHF pairs had roughly similar price action. However, the Swissy got a bullish boost on Tuesday, very likely because of safe-haven flows due to the risk-off vibes at the time because of the political troubles in Italy and Trump’s announcement that he was leaving the Iran Deal.

And it’s this bullish burst on Tuesday that’s the reason why the Swissy fared better than the euro and is on course to finally ending its six-week losing streak.

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