This Week: EURUSD ahead of European CPI

The world’s most-traded FX pair finds itself in its 3rd “correction” so far this year, now falling by more than 4% since its July 18th peak. However, EURUSD’s 14-day relative strength index (RSI) is nearing the 30 level which denotes oversold conditions and marked the bottom for the prior two corrections.

Bloomberg’s model predicted 73% odds that EURUSD will trade between 1.0653 – 1.0912 this week.

Although a technical rebound could be in store, EURUSD traders will still have to contend with plenty of potential fundamental catalysts in the week ahead. Prior to Powell’s Jackson Hole speech.
 

Events Watchlist

• Wednesday, August 30^th:: Germany August consumer price index (CPI)

A forecasted 6% year-on-year print, despite a slight moderation from July’s figure, would still be uncomfortably higher than the European Central Bank’s (ECB) 2% inflation target. Note that Germany is the largest economy in the Eurozone. Hence its CPI prints tend to move EURUSD, as markets front-run the broader Eurozone’s CPI print.

• Thursday, August 31^st: Eurozone August CPI

The forecast for the year-on-year CPI now stands at 5%, while core CPI is expected to come in at 5.3%. A set of higher-than-expected CPI numbers may encourage the ECB to hike rates further, potentially boosting EURUSD, assuming that policymakers can tolerate the worsening conditions in the broader economy.

• Friday, September 1^st: US August nonfarm payrolls

Markets are predicting a headline print of 168,000, which would mark the lowest number of new jobs added in a single month since December 2019. However, the unemployment rate is set to stand pat at 3.5%, though wage growth could ease. Better-than-expected US jobs data may boost the USD while dragging EURUSD lower.



Here’s comprehensive list of other key economic data and events due this week:

Monday, August 28

• JPY: Unemployment rate (Jul)
• AUD: Retail Sales s.a. MoM (Jul)
• EUR: German Buba President Nagel speech

Tuesday, August 29

• EUR: German Consumer Confidence Survey (Sep)
• AUD: RBA’s Bullock speech
• NZD: Building Permits s.a. MoM (Jul)
• USD: CB Consumer Confidence (Aug); JOLTS Job Openings (Jul)

Wednesday, August 30

• AUD: Monthly CPI YoY (Jul)
• EUR: German CPI MoM & YoY (Aug); EU Consumer Confidence (Aug)
• USD: ADP Employment Change (Aug); GDP (Q2)
• JPY: Large Retailer Sales (Jul)

Thursday, 31 August

• CNH: NBS Manufacturing PMI; Non-Manufacturing PMI (Aug)
• EUR: EU’s CPI YoY (Aug); EU’s core CPI YoY
• USD: Initial Jobless Claims; Core PCE Price Index MoM (Jul); Core PCE Price Index YoY (Jul)
• GBP: BoE’s Pill speech

Friday, 1 September

• CNH: Caixin Manufacturing PMI (Aug)
• CHF: Swiss CPI YoY (Aug); Swiss CPI MoM (Aug)
• EUR: HCOB Manufacturing PMI (Aug)
• USD: Nonfarm Payrolls (Aug)
• CAD: GPD Annualized (Q2)