This Week: EURUSD traders await ECB signals

The world’s most-traded FX pair has been trading sideways over the past month.

Such rangebound action comes after a downtrend between mid-July through end-September, as a lot of the Eurozone’s economic woes were priced into EURUSD.

But such rangebound action could be jolted this week, with markets predicting the most one-week volatility for this FX pair since early August!

EURUSD is set to react to the ECB’s policy meeting, as well as key economic data out of either side of the Atlantic.

Even if the fundamental outlook remains unchanged after this week’s events, EURUSD should still unveil potential opportunities within the 1.0455 – 1.0707 range this week.

Events Watchlist:

• Tuesday, October 24th: Eurozone October Purchasing Managers Index (PMI)

The Eurozone’s manufacturing and services sectors are expected to continue languishing in contracting conditions for a third straight month.

Noting that the manufacturing and services PMIs are forecasted to come in at 43.6 and 48.7 respectively, even-lower figures may push EURUSD towards the lower end of the trading range.
 

• Thursday, October 26th: European Central Bank (ECB) policy decision

As far as markets are concerned, the ECB is already done with its rate hikes.

However, EURUSD will remain sensitive to what the Governing Council and ECB President Christine Lagarde has to say about how long its benchmark rates will be kept at this peak, with markets predicting the first rate cut to arrive only by June 2024.
 

• Friday, October 27th: US September PCE Deflator

The Fed’s preferred inflation gauge is forecasted to ease slightly from August’s readings.

Higher-than-expected figures may bolster expectations for US interest rates moving even higher, with a 40% chance currently given to another Fed hike by January.

Heightened odds should boost the US dollar while weighing on EURUSD.

And here’s a more comprehensive list of other key economic data and events due this week:

Monday, October 23

• EUR: Eurozone October consumer confidence

Tuesday, October 24

• EUR: Eurozone October PMIs
• GBP: UK August unemployment; September jobless claims; October PMIs
• USD: US October PMIs
• Brent: IEA world energy outlook annual report
• NQ100_m: Microsoft, Alphabet earnings

Wednesday, October 25

• AUD: Australia 3Q CPI
• EUR: Germany IFO business climate
• CAD: Bank of Canada rate decision
• SPX500_m: IBM, Meta earnings

Thursday, October 26

• EUR: European Central Bank rate decision
• USD: US 3Q GDP; weekly initial jobless claims
• NQ100_m: Intel, Amazon earnings

Friday, October 27

• JPY: Japan October CPI
• CNH: China September industrial profits
• USD: US September PCE Deflator, personal income and spending; October consumer sentiment (final)
• Exxon Mobil earnings