EURUSD has a busy week on the economic calendar and should provide opportunities for traders.
EURUSD – Daily Chart
EURUSD rallied to 1.09 last week and saw an immediate bout of selling. That will be the critical level for the week ahead in the EURUSD.
St. Louis Fed President James Bullard has discussed higher interest rates for the USA. Bullard said the “swift” response of regulators would ease stress in the banking sector. At the same time, the economy and inflation are still robust.
On Friday, Bullard said his estimate for the Fed’s benchmark interest rate would rise by the end of 2023 to the 5.50%-5.75% range. Bullard is on the higher end of expectations compared to other Fed members.
Higher rates were predicted, “in reaction to the stronger economic news and also on the assumption that the financial stress abates in the weeks and months ahead.”
He added that it would be Fed Chair Jerome Powell’s rate decision. He admitted “there could be a downside scenario” if the banking crisis resumes. However, Bullard said there was an 80% probability that the problem had passed.
Investors have been obsessed with a Fed “pivot” since the board started an aggressive rate hike cycle. Still, they have continued to be disappointed by the rate hike path.
EURUSD Forecast
Markets will now look to Monday’s data with an IFO business climate survey for Germany. That will be followed by two consumer confidence reports- Tuesday for the US and Wednesday for Germany.
Inflation will then follow on Thursday for Europe’s largest economy. A steep price drop is expected from 8.7% to 7.3%, and traders should watch that number for a potential miss.
The euro could also come under pressure if Deutsche Bank continues to see selling pressure in the week ahead. Investors turned their attention to DB after the rushed takeover of Credit Suisse.
Germany’s Chancellor Olaf Scholz said: “Deutsche Bank has fundamentally modernised and reorganised its business and is a very profitable bank. There is no reason to be concerned about it.”
“The capital adequacy of European banks is robust, thanks to the work over the past few years and also thanks to the efforts of the banks themselves,” he added.
