empty
 
 

Forex Analysis & Reviews: EUR / USD: awaiting important macroeconomic reports
time 28.08.2019 08:54 AM
time Relevance up to, 30.08.2019 08:30 AM

The euro-dollar pair is guided by a kind of "pyramid" of fundamental factors: geopolitical events determine the general trend, while macroeconomic reports from Europe and the US set the tone for trading in the short term. Over the past two weeks, the external fundamental background has dominated. The escalation of the trade war between the US and China, as well as political battles in Italy, overshadowed the economic calendar. But in the coming days, the situation may change as important releases are expected at the end of the week, which can affect the mood of traders. Moreover, the US-Chinese conflict has been on paused so far, and Italian politicians are still bargaining for the candidacy of the future prime minister.

This image is no longer relevant

The most significant macroeconomic indicators for the EUR/USD pair will be published on Friday. But even tomorrow, on Thursday, the pair may react to some releases. First of all, we are talking about macroeconomic indicators of Germany. The latest IFO report, which was published on Monday, outlined a very bleak picture. According to their data, it is not only the German industrial sector but also the service sector is in the recession stage. This state of affairs will probably affect the dynamics of the country's economy as IFO economists noted that Germany's GDP is likely to stagnate in the second half of the year. This has been the most optimistic forecast given the level of pessimism that German industrialists demonstrate. According to experts, such a gloomy picture has not existed over the past ten years. Moreover, published figures, which are already threatening Germany with a technical recession, do not include the last round of the trade war. Therefore, we can assume that the IFO indicator will continue the downward trend with a high degree of probability.

This is why tomorrow's releases can either aggravate the overall fundamental picture for the euro or provide some support for the currency. The focus is on German inflation and the dynamics of which largely determine the dynamics of the pan-European inflation rate. According to forecasts of most experts, the general consumer price index in Germany will decline to -0.1% (on a monthly basis), after a two-month growth. In annual terms, the index should also show a negative trend, dropping to 1.5% (also after two-month growth). A harmonized consumer price index, which was adjusted for tax changes, can show minimal growth by + 0.5% (m / m) and + 1.3% (y / y).

This image is no longer relevant

Moreover, data on the German labor market will also be published on Thursday. In this case, the published figures should not disappoint traders. According to general forecasts, the unemployment rate will remain at the 5 percent mark (as in the past three months), and the number of unemployed will increase by "acceptable" four thousand. If these figures come out at a predicted level, the European currency will receive some support but only if German inflation does not disappoint investors.

Thursday's US session will also not allow traders to "relax". Tomorrow, we will learn the second estimate of US GDP growth for the second quarter. According to most analysts, this indicator will be revised downward from 2.1% to 2.0%. It is also worth paying attention to the inflation component of GDP. It is believed that this indicator is monitored by the Federal Reserve "with a special predilection" (as is the price index of the RFE). Therefore its positive dynamics can offset the negative about a slowdown in the economy. According to initial estimates, the indicator came out at 2.4%, which is the best result in 2018. If the price index of GDP is also revised downward, the dollar will again fall under a wave of sales.

This image is no longer relevant

Yet, Friday's data will determine the "well-being" of the European currency. Let me remind you that there is still no consensus on the further actions of the ECB in the foreign exchange market. According to some experts, the European Central Bank may reduce the deposit rate and at the same time introduce a multi-level system with certain conditions. According to other analysts, the regulator may return to a quantitative easing program. The option of applying aggressive measures to mitigate monetary policy is not ruled out.

Mario Draghi during his recent speeches did not exclude the implementation of such scenarios. He said that everything will depend on the incoming data. In this context, Friday's indicators will play an important role. We are talking about key data on the growth of European inflation in August. According to forecasts, general inflation will show signs of recovery, increasing to 1.1% from the previous value of one percent. A similar trend is expected from the side of core inflation with growth to 1% from the previous of 0.9%. Contrary to forecasts, if the core consumer price index again disappoints the market, then the euro will weaken against a basket of major currencies and the dollar will not be an exception here.

From a technical point of view, the pair continues to trade in the 100-point price band of 1.1040-1.11140 at the lower and middle lines of the Bollinger Bands indicator, respectively. Macroeconomic releases can "lead" the price to one of the borders of this range. But it is possible to overcome the limits of a wide-range flat only with the help of an external fundamental background. In other words, economic reports may cause increased volatility, but they will not be able to determine persistent and long-term (trend) movement. In this case, the situation completely depends on the prospects for US-Chinese relations and indirectly on the outcome of the resolution of the political crisis in Italy.

Irina Manzenko,
Chuyên gia phân tích của InstaForex
© 2007-2022
Benefit from analysts’ recommendations right now
Top up trading account
Open trading account

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.

  • Giao dịch khôn ngoan, thành công
    Nạp tiền vào tài khoản của bạn với ít nhất $ 500, đăng ký cuộc thi và có cơ hội giành được các thiết bị di động.
    THAM GIA CUỘC THI
  • Ferrari từ InstaForex
    Nạp tiền vào tài khoản của bạn với ít nhất 1.000
    tham gia cuộc thi và giành chiến thắng Ferrari
    F8 Tributo
    THAM GIA CUỘC THI
  • Tiền gửi lần truy cập
    Gửi vào tài khoản của bạn 3.000 đô la và giành được 1.000 đô la
    THAM GIA CUỘC THI
  • 100% tiền thưởng
    Cơ hội duy nhất của bạn để nhận 100% tiền thưởng khi gửi tiền
    NHẬN THƯỞNG
  • 55% Tiền thưởng
    Đăng ký tiền thưởng 55% cho mỗi lần gửi tiền của bạn
    NHẬN THƯỞNG
  • 30% tiền thưởng
    Nhận 30% tiền thưởng mỗi khi bạn nạp tiền vào tài khoản của mình
    NHẬN THƯỞNG

Recommended Stories

Bitcoin accounts of Binance users are 101% secured with BTC

On Wednesday, the long-awaited report from South African auditing company Mazars was made public. It stated that the largest cryptocurrency exchange in the world, Binance, has direct control over

Irina Yanina 08:49 2022-12-08 UTC+2

Data on US inflation to determine market trends in foreseeable future (GBP/USD and AUD/USD)

It seems that high volatility could be seen only in the stock market. What is more, the satiation in both stock and currency markets is very uncertain. Yesterday, the currency

Pati Gani 08:28 2022-12-08 UTC+2

USD/CAD. The Bank of Canada is not an ally of the loonie

The Canadian dollar did not benefit from the Bank of Canada's December meeting. On the contrary, the loonie weakened noticeably against the greenback: the USD/CAD pair reached its monthly high

Irina Manzenko 08:08 2022-12-08 UTC+2

Analysts cast doubt on soft landing

Soon all three major central banks will announce their rate decisions. However, I'm not particularly interested in speculation about the size of rate hikes by central banks. Recently, there have

Chin Zhao 06:33 2022-12-08 UTC+2

GBP/USD. Overview for December 8. The Democrats won the Senate election.

On Wednesday, the GBP/USD currency pair maintained its position above the moving average line. Consequently, we can once more state that there has been a slight decline in the pair

Paolo Greco 04:10 2022-12-08 UTC+2

EUR/USD. Overview for December 8, 2022

On Wednesday, the EUR/USD currency pair kept moving. Since there are no fundamental or macroeconomic backgrounds, such a movement today shouldn't be considered surprising in theory. Yesterday, the pair

Paolo Greco 04:10 2022-12-08 UTC+2

AUD/USD. The Australian dollar's growth is unreliable.

Despite the US dollar's overall market weakness this week, the Australian dollar plunged when paired with the US currency. So, on December 6, the day before the RBA's December meeting

Irina Manzenko 16:37 2022-12-07 UTC+2

The euro is being substituted for sales again

EUR/USD The euro has allowed sellers to profit several times, displaying a local maximum before reversing course. The euro is attempting to pass the 1.0600 level once more, and sales

Jozef Kovach 16:23 2022-12-07 UTC+2

EUR/USD. Traders are plagued by doubts as the pair oscillates near the 1.0500 level.

Against a nearly empty economic calendar, the EUR/USD pair is fluctuating near the 1.0500 level. Both buyers and sellers are uneasy in the vicinity of the fifth figure

Irina Manzenko 15:03 2022-12-07 UTC+2

EURUSD: Bulls went for a new attack amid positive German and eurozone statistics

Everyone is talking about the onset of recession in the eurozone and that a recession in the U.S. is just around the corner. However, the U.S. labor market and business

Marek Petkovich 15:00 2022-12-07 UTC+2
Không thể nói chuyện ngay bây giờ?
Đặt câu hỏi của bạn trong phần trò chuyện.