Key Economic Data and NFP Set to Shape Market Outlook

EUR/USD: Anticipating Breakout with Packed Economic Calendar

Inflation remained unchanged in May as shown by the Core PCE Price Index, which printed a flat reading of 0.1%, meeting the consensus. However, the previous reading was revised from 0.2% to 0.3%, so, overall we can see a downward trend for U.S. inflation. This sparked some optimism among investors, who speculated that the Fed may start their rate cutting cycle in September.

At the time of writing, there’s a 57.9% probability of a rate cut in September but the week ahead is filled with major releases, which could severely alter the odds of the rate cut. From Parliamentary Elections to speeches and the always important Non-Farm Payrolls Report, this week has it all so we can expect an interesting price action.

Economic Calendar Highlights

Over the weekend the French Snap Elections took place and the Euro was affected as we can tell from the gap created on the chart.

Monday at noon we take a look at Eurozone inflation with the release of the German Preliminary CPI, which is expected to increase from the previous 0.1% to 0.2%. Later in the day, at 2:00 pm GMT, the U.S. ISM Manufacturing PMI will come out, showing the health of the manufacturing sector according to the opinions of about 300 purchasing managers.

More inflation data will come out Tuesday at 9:00 am GMT in the form of the Eurozone Core CPI Flash Estimate. At 1:30 pm GMT, ECB President Lagarde and Fed Chair Powell will participate in a panel discussion at the ECB Forum on Central Banking. Any hints about their respective policies, especially clues about the rates, may create a strong reaction on the charts.

Wednesday is another busy day, with the ADP Non-Farm Employment Change coming out at 12:15 pm GMT, the U.S. ISM Services PMI at 2:00 pm GMT, and the FOMC Meeting Minutes later at 6:00 pm GMT.

Thursday the U.K. Parliamentary Elections take place and U.S. banks will be closed in celebration of Independence Day. It may turn out to be a difficult-to-trade day, with irregular volatility and possibly jerky movement.

The week will end Friday with one of the biggest market movers: the U.S. Non-Farm Payrolls report that shows the change in the number of employed people during the previous month, excluding the farming sector. The release is scheduled at 12:30 pm GMT, alongside the Unemployment Rate and the Average Hourly Earnings.

Technical Outlook – EUR/USD

The last two weeks have been a seesaw for the EUR/USD, with jerky movement, and without a clear direction. It looks like all moves to one side are immediately reversed but given the cluster of events scheduled for this week, we will probably see a breakout and a more directional movement.

The key levels to watch are the resistance at 1.0775, which also coincides with the 50-day Moving Average, and to the downside, we have support at 1.0635. The pair is currently trading right on the bearish trend line but we cannot really talk about a bounce or break scenario here because the short-term importance of the trend line is low.