The EUR/USD pair continues its downward course. During today's US session, the bears approached the price low of the year (1.1250) again, which was updated just last week. Moreover, timid attempts at corrective growth are stopped – bulls are content with just a few dozen points, after which the pair turns down again. Short positions are still a priority, so any more or less large-scale upward pullbacks can be used to enter sales.
Monday's economic calendar is practically empty. Interest is aroused only by the monthly report of the Bundesbank and the speech of ECB Vice-President Guindos. The data on the growth of housing sales in the secondary market will be published during the American session, where it is expected to decline to -1%. However, these fundamental factors are unlikely to have a significant impact on the pair. Most likely, EUR/USD will move according to the inertia of Friday's trading, amid increasing hawkish expectations about the Fed's further actions. Last Friday, Fed representative Waller said that the regulator needs to accelerate the curtailment of QE.
On Tuesday, the pair will react to the PMI indices. Negative dynamics are expected here, both in the manufacturing sector and in the service sector. The strongest decline should be demonstrated by the German PMI index in the manufacturing sector (54 points in November from the October value of 57.8). In my opinion, the indicators will come out in the "red zone", even despite weak forecasts, given the next wave of the coronavirus crisis in Europe. This fact will put additional pressure on the euro. But on the contrary, the index of business activity in the US manufacturing sector, which will be published on the same day may support the US dollar. This indicator should show growth up to 59 points after a three-month decline.
On Wednesday, the German indicator of business environment conditions from IFO will be published during the European trading session. The indicator has been consistently declining over the past 4 months, and negative dynamics are also expected in November. Given the recent events in Europe (deterioration of the epidemiological situation, a wave of lockdowns of varying severity), IFO reports may disappoint. During the US session on Tuesday, all attention will be focused on the minutes of the last Fed meeting. The document will allow us to assess the general mood of the regulator in the context of the latest inflation data. It should be noted that the tone of statements by many Fed members (Evans, Mester, Bullard, Bostic, Waller mentioned above) has tightened for the last two weeks, so it is likely that the Fed's "minutes" will also be hawkish. The main intrigue of the publication lies in the question of how seriously the members of the Committee take the idea of raising the interest rate next year.
On the same day, US GDP growth in the third quarter (second estimate of the indicator) will be released. According to initial data, the American economy slowed down significantly in the 3rd quarter – the volume of GDP increased by only 2.0% after an increase of 6.7% in the second quarter. According to forecasts, the indicator will be revised upwards (2.2%) during the second assessment.
In addition, the most important inflation indicator, the main index of personal consumption expenditures, will be published on Wednesday. According to many experts, the indicator of price pressure of consumer spending, and above all its core indicator, is the "most preferred" for Fed members in the context of the analysis of inflationary processes. Therefore, Friday's release may significantly strengthen the position of dollar bulls, especially since analysts predict an increase in the PCE Price Index to 0.4% on a monthly basis and to 4.1% on an annual basis.
On Thursday, American trading platforms will be closed – on this day, the States celebrate Thanksgiving. But during the European session, ECB Chairman Christine Lagarde will speak, who will deliver a speech at a legal conference. The topic of the speech will not be related to the prospects of the Central Bank's monetary policy, so traders can ignore her speech. Also on this day, ECB Executive Board members Frank Elderson and Isabelle Schnabel will speak. In their earlier speeches, they voiced a "dovish" position, so their rhetoric may put additional pressure on the euro.
Finally, Friday, like Monday, will be almost empty. The German import price index and another speech by Lagarde on the sidelines of the above-mentioned symposium are the only things that will be important.
It is also worth noting that traders of the EUR/USD pair will react not only to the above-mentioned planned events. So, Joe Biden should finally decide this week on a candidate for the post of head of the Fed. According to representatives of the White House, the US president will announce his decision "before Thanksgiving." As you know, the main contenders for the position are the current head of the Federal Reserve Jerome Powell and a member of the Board of Governors Lael Brainard.
The situation with the spread of coronavirus in Europe will also be in the spotlight. Last week, Austria announced a 20-day full knockdown, which concerns not only unvaccinated but also vaccinated citizens. Experts fear that Germany will go the same way. For example, it became known this weekend that three municipalities in the German federal state of Baden-Wurtenberg were the first in the country to introduce a night curfew and partial lockdown for their residents. The deterioration of the epidemiological situation in Europe in general and in Germany, in particular, will put additional pressure on the euro.
From a technical point of view, the EUR/USD pair on the daily and weekly charts are located between the middle and lower lines of the Bollinger Bands indicator and all the lines of the Ichimoku indicator. Any more or less large-scale corrective pullbacks can be used to open short positions with the first target of 1.1250 (the annual low and the lower line of the Bollinger Bands indicator on D1) and the main target of 1.1200.
