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Even though there were a lot of uncertainties in play for the euro last week, it managed to keep its head above water thanks to dollar weakness. Can the same hold true this time?

ECB monetary policy meeting accounts (Nov. 22, 12:30 pm GMT)

The main event for the shared currency this week, at least on the economic calendar, is the release of the ECB meeting minutes. Keep in mind that the central bank will cap off its asset purchase program by next month, so the attention is now on when they might start tightening.

Updated staff forecasts on inflation and growth could provide a few more clues, even as Draghi has tried to dodge the topic. Note that the latest batch of leading indicators have shown dips, hinting at slower growth momentum.

Flash PMI readings (Nov. 23, starting 8:15 am GMT)

On the subject of leading indicators, another round of flash PMI readings are up for release before the trading week comes to a close. These numbers are for the current month, likely providing clues on how businesses could adjust to their economic outlook in the months ahead.

A quick preview of these numbers suggests a slight pickup in manufacturing activity from both Germany and France while the services sector could print slower growth. Overall, the region’s flash manufacturing PMI could hold steady at 52.0 while the flash services PMI could dip from 53.7 to 53.6.

More on Italy and Brexit

Ahh, the drama continues… Both these geopolitical risks have been front and center for the euro’s price action and could continue to spur big moves in the days ahead.

The latest on Italy’s budget is that the government refused to revise its growth forecasts and spending plans, essentially insisting that the deficit would amount to 2.4% of its GDP but pledging to keep a watchful eye on its finances and putting in more measures to keep things in check.

TBD if the European Commission is convinced, but it is due to make a formal announcement on budget forecasts for the region, particularly for countries in violation of deficit and debt rules. Watch out for stern warnings, even for the likes of Spain and France.

As for Brexit, it seems that the euro and franc are somewhat able to benefit off the pound’s misery as these could serve as “safe-havens” in the region. Word on Downing Street is that there’s still a plot to call for a vote of confidence in PM May’s leadership as Conservatives are unhappy with the “this deal or no deal” situation that the U.K. is currently in.

Last Week’s Price Review

The Euro

The euro is mixed but a net winner for the week (as of 2 pm GMT), so the euro may soon be ending its five-week losing streak. And the euro can thank the Greenback’s overall weakness for that.

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

The euro’s price action looks a bit chaotic at first glance. But if we strip EUR/NZD and EUR/GBP from the overlay, then we can see that EUR pairs actually had roughly uniform price action.

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

And with that out of the way, most EUR pairs gapped lower at the start of the trading week and more bears then came out to maul the euro during Monday’s late Asian session.

There were no direct catalysts for the euro, but as has been the case in the past few weeks, the euro was likely kicked lower because of Brexit-related concerns since there were reports over the weekend that some anti-Brexit ministers were on the verge of quitting, as well as reports that British PM Theresa May supposedly canceled a Monday cabinet meeting that will pave the way for a Brexit deal to approved by Tuesday.

Aside from Brexit-related uncertainty, the euro was also likely weighed down by Italy-related concerns, market analysts say, since Italy was expected to re-submit an amended budget on Tuesday.

EUR pairs eventually found support (except EUR/AUD and EUR/NZD), likely because the euro was feeding off the Greenback’s weakness in the wake of the Wall Street Journal (WSJ) report and South China Morning Post (SCMP) report about restarting trade talks between the U.S. and China.

The euro’s rise would then become more broad-based during Tuesday’s morning London session, thanks to British Cabinet Office Minister David Lidington’s comment that a Brexit deal is “within touching distance now” and that he’s “cautiously optimistic” that the E.U. and the U.K. can agree on a deal within 24-48 hours.

The euro would tumble a bit later when the draft of the deal was leaked during Tuesday’s U.S. session. However, buyers quickly regained their footing and sent the euro higher.

Interestingly enough, the euro didn’t even blink when Italy announced that it would maintain its forecasts for growth and target deficit for 2019, despite threats of possible sanctions from the E.U.

At any rate, sellers would return when Wednesday rolled around, probably because of profit-taking ahead of Theresa May’s cabinet meeting.

And more sellers would emerge later during Wednesday’s morning London session, apparently because of Democratic Unionist Party (DUP) MP Jeffrey Donaldson’s comments during a BBC interview that implied that the DUP won’t back May’s deal.

However, buyers would return after this tweet from Christopher Hope, Chief Political Correspondent at The Daily Telegraph, appeared to contradict Donaldson’s comments.

After that, the euro tossed and turned because of conflicting reports about Theresa May’s cabinet meeting.

However, it was later revealed that Theresa May’s cabinet supported the deal, which gave the euro a bullish boost.

The euro then dipped, likely because of profit-taking. However, there was apparently follow-through buying since the euro began to move higher again.

Unfortunately for EUR bulls, Brexit Secretary Dominic Raab announced his resignation, which caused the euro to broadly weaken. The damage was only limited, though, and support quickly formed.

The euro even climbed higher ahead of Theresa May’s speech. And when the British PM did speak, she had a defiant and confident tone that helped to reassure and calm the market, market analysts say, which is probably why the euro was able to add to its gains. It also probably helped that a leadership challenge did not materialize back then.

Anyhow, the euro tried to add to its gains on Friday. However, ECB Overlord Draghi stuck a cautious tone and implied that the ECB is ready to cut rates (if needed) during his speech, which apparently dampened demand for the euro.

Fortunately for the euro, Dallas Fed President Robert Kaplan and Fed Vice Chair Richard Clarida expressed some cautious views, which caused the Greenback to tank. And looking at price action, the euro was one of the main beneficiaries of the Greenback’s weakness (after the Kiwi and Aussie).

The Swiss Franc

The Swissy is the third worst-performing currency of the week (as of 2 pm GMT), so the Swissy is apparently headed for its third week of losses, which is rather odd since risk aversion was the dominant sentiment this week.

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

As usual, EUR and CHF were dancing roughly in tandem. However, the Swissy actually had the upper hand for most of the week, likely because of the risk-off vibes.

However, the euro won out on Thursday, apparently because the Swissy didn’t get a boost (and even weakened on some pairs) after Theresa May’s speech.

I also have a sneaking suspicion that the SNB may have been weakening the Swissy since risk aversion was the prevailing sentiment during Thursday’s U.S. session (and for most of the week for that matter).

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