04.12.2022 03:55 PM
EUR/USD. Preview of the week: "silence in the air" and a half-empty economic calendar

The euro-dollar pair was "flying" in a 100-point price range on Friday, reacting to contradictory data on the US labor market growth. On the one hand, the NonFarm report did not disappoint: almost all components of the report came out either at the forecasted level or slightly above the forecasts. The only exception was the wage figures, which really surprised dollar bulls. For example, the average hourly earnings growth indicator was up 5.1% year-over-year, instead of the forecasted decline to 4.6%. The indicator had been declining for the past two months, but then went back up in November.

I suppose the wage component pushed the bears to become more active: the pair fell to 1.0440 on Friday, retreating from the daily high by a hundred pips. But the bears couldn't hold their positions at the end of the trading day. Traders came to the conclusion that the NonFarm report will not be able to change the Federal Reserve's position in the context of further fuelling the hawkish mood. By the way, based on Friday's report, the probability of a 50-point rate hike at the December meeting was 78% (according to the CME FedWatch Tool). Accordingly, the 75-point option has only a 22% chance of being realized.

This image is no longer relevant

Actually, the pair finished the trading week at 1.0534 for this reason, aiming for the 5th figure, so to say. The main intrigue of the coming week will be the trivial question: will the bulls be able to settle in this price area or will they aim for the 4-5 figures till the December FOMC meeting?

There are two things to note here. First of all, the economic calendar for the week ahead is very thin (for the EUR/USD pair) - in fact, more or less important reports will only be released on Monday and Friday (the ISM US Service Business Activity Index and the Producer Price Index).

Secondly, all upcoming macroeconomic reports will be released during what is known as the "blackout period". This is when the Fed staff generally do not speak publicly between a week prior to the Saturday preceding a FOMC meeting. Therefore, traders will be left to their own devices - one-on-one with an army of specialized experts and insiders. As a rule, this period is very volatile, but this volatility is not unidirectional, because traders are hesitant to bet on the dollar (or against it) ahead of such an important event. The December FOMC meeting is a kind of the last chord, the most significant event of a fundamental character in this month.

Considering this disposition, we can assume that the pair will soon drift and trade within a wide price range of 1.0400-1.0590, reflecting the current news flow.

As mentioned above, there's not much to see in the economic calendar of the first week of December, if we talk about the EUR/USD pair.

On Monday, the final estimates of November PMIs will be released in Europe. According to forecasts, the final estimates will coincide with the preliminary ones. European Central Bank President Christine Lagarde is also expected to speak tomorrow. She had already stated her stance last week, declaring her "neutrality" so to speak (she supported neither the hawks nor the doves in the context of a slowdown in monetary tightening). The ISM service sector business activity index will be released during Monday's U.S. session. It is quite significant, but especially so in light of the ISM manufacturing index's disappointment. According to preliminary forecasts, the service sector is expected to slip to 53 points. If that is the case, it will be the weakest result of the year (the dollar will be under more pressure).

On Tuesday, Germany will release data on manufacturing orders and the U.S. will release data on the trade balance.

On Wednesday, Germany will release data on industrial production. There will also be final estimates of many reports: European GDP growth (Q3), employment rates in the European region and the cost of labor figure (U.S.). In addition, ECB representative Fabio Panetta will speak on Wednesday.

On Thursday, Lagarde will deliver another speech. However, in this case her speech will be ceremonial - she will give a welcome speech at the opening of the economic forum. Thursday's U.S. session will feature secondary data on the U.S. labor market. We will learn more about the dynamics of the growth of primary (and secondary) applications for unemployment benefits.

Finally, on Friday, the producer price index will be released in the US. As you know, this indicator may be an early signal of a change in inflationary trends or a confirmation of them. According to preliminary forecasts, the indicator is expected to rise 0.1% on a monthly basis (after rising 0.2% in October) and slow down to 7.2% on a yearly basis (after rising 8.0% in October). Excluding food and energy prices, the index could also show a downtrend - both in monthly and annual terms. Such results will disappoint dollar bulls, especially after the release of the core PCE index, whose growth has also slowed.

Overall, the economic calendar in the week ahead is likely to provoke (maintain) increased volatility in the pair, ahead of the December FOMC meeting (December 13-14). But at the same time the aforementioned reports are unlikely to contribute to the price movement both to the upside (in the context of the 6th figure) and to the downside (in the context of the 3-2 figures). I assume that in the medium term, the pair will trade in the range of 1.0400-1.0590 (the Tenkan-sen line is the upper line of the Bollinger Bands on the one-day chart), alternately pushing back against the limits of the range.

Irina Manzenko,
Chuyên gia phân tích của InstaForex
© 2007-2023
Euro vs US Dollar
Select timeframe
Start trade
Start trade
  • Grand Choice
    Contest by
    InstaForex always strives to help you
    fulfill your biggest dreams.
  • Tiền gửi lần truy cập
    Ký quỹ tài khoản của bạn với $3000 và nhận được $8000 nhiều hơn!
    Trong Tháng 3 chúng tôi xổ $8000 trong chiến dịch Chancy Deposit!
    Có được một cơ hội giành chiến thắng bằng việc ký quỹ $3000 vào một tài khoản giao dịch. Đáp ứng được điều kiện này, bạn trở thành một người tham gia chiến dịch.
  • 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.
  • 100% tiền thưởng
    Cơ hội duy nhất của bạn để nhận 100% tiền thưởng khi gửi tiền
  • 55% Tiền thưởng
    Đăng ký tiền thưởng 55% cho mỗi lần gửi tiền của bạn
  • 30% tiền thưởng
    Nhận 30% tiền thưởng mỗi khi bạn nạp tiền vào tài khoản của mình

Recommended Stories

EUR/USD. PMI indices and echoes of March meetings

The general opinion on recent events has not yet been reflected in the foreign currency market. The Fed and ECB's announcements were met with "pointwise" reactions from traders

Irina Manzenko 19:24 2023-03-24 UTC+2

GBP/USD. Results of the March meeting of the Bank of England

The Bank of England raised the interest rate by 25 points in response to the outcomes of the March meeting. At the same time, the regulator stated unequivocally that

Irina Manzenko 18:39 2023-03-24 UTC+2

GBP/USD. Overview for March 24. Bank of England meeting: no important decisions have been made

The overall GBP/USD currency pair is steadily rising and is within the side channel on the 24-hour TF. Recall that even in the absence of good fundamentals, the pair

Paolo Greco 18:16 2023-03-24 UTC+2

EUR/USD. Overview for March 24, 2023

The EUR/USD currency pair is still increasing as if nothing has changed. The European and American currencies did not experience many incidents or breaking news on Thursday

Paolo Greco 17:54 2023-03-24 UTC+2

GBP/USD. Overview for March 24: Prospects for the British currency in the coming weeks.

The GBP/USD currency pair has been rising for the past two weeks as well, but it remains limited to the side channel on the 24-hour TF. However, both euro currencies

Paolo Greco 17:39 2023-03-24 UTC+2

EUR/USD. Overview for March 24: Prospects for the euro currency in the coming weeks.

The ECB began raising interest rates six months later than the Fed, causing the euro to decline sharply. The scenario changed to the contrary in the second half of 2023

Paolo Greco 16:54 2023-03-24 UTC+2

Oil and gas investments are declining

The UK Energy Transition Commission said in its recent report that in order to move to a clean, zero-emissions planet by 2050, investment in the energy transition has to increase

Irina Yanina 11:23 2023-03-24 UTC+2

Bitcoin gains momentum

While investors in traditional assets vacillate between Fear and Greed, bitcoin is steadily rising. Since the beginning of the year, the token is up 71% and poised to close

Marek Petkovich 11:10 2023-03-24 UTC+2

US banks take advantage of Fed's liquidity

The euro and the pound sterling are slowly edging lower against the dollar. The reason for that is a technical correction, which usually occurs after a volatility surge. Meanwhile, traders

Jakub Novak 08:32 2023-03-24 UTC+2

Dollar dips as the Fed announces a less aggressive policy stance

The Fed had been raising its key interest rate by a quarter percentage point. However, it has changed tactics, most likely because it is preparing for a pause

Irina Yanina 03:23 2023-03-24 UTC+2
Không thể nói chuyện ngay bây giờ?
Đặt câu hỏi của bạn trong phần trò chuyện.