The next week is packed full of high-importance data releases and events with Wednesday and Friday of note. On Wednesday we have the latest FOMC rate decision, where the Fed is fully expected by another 75 basis points, while on Friday we have Euro Area inflation and the latest look at US Core PCE. All the events shown below have the ability to move the Euro pair, leaving investors at risk if they are not following these releases. The economic calendar is your best friend next week.
This week’s 50 basis point rate hike by the European Central Bank (ECB) did little to increase the weakened Euro, while the somewhat sketchy details of the central bank’s anti-fragmentation program – the Transmission Protection Instrument (TPI) – left traders guessing as to how and when it may be used to quell peripheral bond spreads. Financial markets have already priced in another 50bp rate hike at the next ECB policy meeting on September 8 and it is hoped that more details about TPI will be known well ahead of this meeting if bond yields start to rise further.
With the absolute volume of risk events in the week ahead, EURUSD could easily trade back up to strong resistance at 1.0340, test support around parity again, or test in the same week. The 14-day ATR is currently around 100bps and climbing, while EUR/USD currently changes hands at 1.0120. Minor levels of support and resistance at 1.0080 and 1.0280 may slow any move.
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