September ECB Meeting
Price action in EURUSD has been relatively unexciting recently, however this could be set to change today with two key events to monitor. First, the ECB will meet for its September rates setting meeting. No further easing is forecast today and instead, risks are skewed towards the ECB taking a more hawkish tone. The ECB recently signalled that it was likely approaching the end of its easing cycle and with core CPI recently seen rising above forecasts, there is chance that the end of the cycle is already in. Should the ECB take a more hawkish tone today, focusing on upside inflation risks and signalling an extended hold in rates, this could see EUR rallying today.
US CPI
Following on from that meeting, traders will then be turning their attention to the upcoming US CPI report due this afternoon. Current forecasts are for annualised CPI to have risen to 2.9% from 2.7% last month. However, on the back of yesterday’s heavy downside surprise in PPI, dovish risks are seen. Should CPI undershoot forecasts today, this will be firmly bearish for USD as traders ramp up easing expectations across the remainder of the year. In this scenario, coupled with a hawkish ECB meeting, EURUSD could well test highs by the end of the week.
Technical Views
EURUSD
For now, the pair has settled back into the triangle formation following a false break on Monday. While above 1.1589, focus is still on an eventual upside break with 1.1899 and 1.20 the next bull targets to note. Below 1.1589, focus turns to 1.14 as the next support to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.