EURUSD was threatening a breakout to new levels above the 1.12 mark but has since pulled back into a price channel.
EURUSD: Weekly Chart
The price currently trades at 1.10, and the support is lower at 1.08 with the moving average.
Tuesday has data from Germany with the IFO business climate index. That is expected to drop to 88 from 88.4 and is trending lower from a high of 93.5 in April. A higher number could see a boost in the price of the euro.
Tomorrow also has consumer confidence released for the US economy, with expectations for a move to 111.8 from 109.7. That likely puts the USD on a better path, as the risk is to the upside on the US number and the downside on the euro.
Thursday will bring consumer confidence from the German economy, and it is expected to be another weak number compared to the previous month.
The big event will be on Thursday, when the European Central Bank announces its latest interest rate decision. The same day will have the US central bank’s decision, and analysts are betting that both banks will make their final rate hike in the current cycle.
Prices have risen by 3% in the last year in the United States, the slowest rate in more than two years, while in the eurozone, inflation is expected to drop to 5.3%.
However, there is still a chance that Fed Chief Jerome Powell and ECB President Christine Lagarde will continue to adopt a hawkish tone, with the potential for another hike later in the year.
However, analysts had already expected two more increases from the Fed.
“25 basis point hikes from both look like a done deal and are widely expected. The more pressing question, though, is whether the peak in rates will have been reached or whether one more hike is on the cards for September,” analysts at Investec said.
“The ECB wants the market to understand its commitment to the timely return of inflation to target and its willingness to go “higher and longer” if necessary,” said economists at Deutsche Bank.
