Online brokers and other trader itches for clues concerning the increment of interest rate, and how soon the central bank can implement the program. The FOMC will be meeting during the week and the statement from the Chairman will influence the financial market because a hawkish tone will favor the US dollar.
EURO and US News
ZEW Economic Sentiment
The reason why some investors care about the German ZEW is because of the leading feeds gotten from data, which has an overview of the economic health of the Eurozone.
However, the analysis was carried out among 274 German Institutional investors about the relative 6month of the economic outlook for the Eurozone. Zentrum fur Europaische Wirtschaftsforschung (ZEW) mainly focuses on the German economy which overshadows the other European zones outlook.
Data that is above 0.0 indicates optimism while any data below shows pessimism. Market analysts tend to understudy the tune of respondents based on the level of diffusion index.
The outcome can be an early signal of the future economic activity in the Eurozone.
The forecast is 20.6 while the previous is 21.0
Core Consumer Price Index m/m
Inflation correlates with consumer prices because inflation is also important to currency valuation. The central bank increases the interest rate as a containment measure when prices are on the increase. The exclusion of energy and food helps the analysts of the bureau of labor to access the change in the price of services and goods that consumers have purchased within a certain period. Food and energy account for a majority of the CPI about a quarter of it. That is why FOMC pays attention to the core data.
Therefore, if the data report is greater than the forecasted, it is good for the currency, but a lower outcome is not suitable for the currency.
The previous data on CPI was 0.2% while the forecast is 0.4%.
EURUSD Technical Analysis
Monthly Chart Objective: Down Trend Buildups
Monthly Resistance 1.2300, 1.19133.
Monthly Support levels 1.16025, 1.15117.
From the monthly chart, we can see the Sellers are building momentum in the market as the bearish candlestick are bigger than the bullish candles.
You can see that the price is resting on a support zone of 1.15117, if the pressure can close below the level, we shall see another rally to the downside of the pair, but if the support should hold it may pull up towards the 1.17705 levels.
The forex calendar will highlight the days of high-impact news which may move price to either the upward direction or towards the downward movement.
Weekly Chart downtrend
Weekly Resistance levels 1.22665, 1.19100, and 1.17001
Weekly Support levels 1.15200 and 1.15133
The EURUSD pair on the weekly chart remains bearish as you can see the swing creating lower highs and lower lows. There are two psychological zones the online brokers and forex traders are observing on the weekly chart.
A close above the 1.17001 resistance level will shift the attention of the traders from a downtrend to an uptrend, while a close below the support level will attract more forex traders to go short on the pair.
Daily Chart Projections: Downtrend
Daily Resistance Levels 1.19090, 1.17000
Daily Support levels 1.15172
The EURUSD pair is setting up for a bullish run as online brokers can see the chart pattern is forming a double bottom. A close above the 1.17000 resistance zone will take the price to another level. The Bulls are hoping to dominate the market when they can turn the market from the bearish trend.
However, the daily chart is still on a downtrend having seen the price drop from the 1.19090 level. The bearish candle which took the price down from the 1.17000 zones is the first hurdle the Bulls need to overcome. If the consolidation of price can close below the 1.15172 support level the downtrend continues.
Conclusion and Weekly Price Objectives
Analysts and online brokers are concerned about the stagflation crisis in the economy, and all eyes will be on the CPI and retail sales data during the week.
The Federal Reserve is likely going to reduce the monthly bond purchases in November and later they plan to increase the Interest rate from the following year.
According to some analysts like JP Morgan, they see the stagflation fears as an overblown topic. He sees the increase in energy prices because of both a demand and supply shock. Some banks on Wall Street see also state in their own opinion that stagflation is not a major concern and it won’t act as a barrier to the growth of equities this year.