Oct 31, 2023

EURUSD has inflation data from the Eurozone tomorrow, with US jobs data due on Friday. 


EURUSD – Daily Chart 

The EURUSD pair trades at 1.0568 and has a support building below near 1.0550. The upside resistance stands at last week’s 1.0694 highs. 

The Eurozone has inflation data released on Tuesday, with analysts expecting a dip in October inflation to 4.2% from 4.5%. GDP data will follow, with traders expecting flat growth and a 0.3% drop in yearly performance to 0.2%. 

Meanwhile, the Bundesbank has tried to shake off the description of Germany’s economy as the “sick man of Europe”.  

“The inflation story is going in the right direction,” Bundesbank President Joachim Nagel said. “The beast is still there, but, to a certain extent, we have tamed the beast.” 

“It’s a completely different, different situation,” Nagel said. “There are some structural changes necessary, but if you take, for example, the labour market, we are still running the economy on full employment, more or less.” 

“I believe there is that understanding that we need to do something, but we are not the sick man of Europe,” he added. Europe’s largest economy is predicted to be the sole one without growth this year. 

“It’s not good for this year,” Nagel said of growth, “but for next year, growth is coming back.” 

The euro could rally recently on the idea that the Federal Reserve had moved on from interest rate hikes. However, the economic picture has seen the dollar back on the front foot. Friday’s data on Non-Farm Payrolls from the US could help to paint that picture further. 

There should be volatility on Wednesday with a Fed rate decision and press conference. The central bank is highly expected to hold rates steady but may give an outline for future actions. 

ING analysts expect the Fed to keep its current stance to avoid disrupting the market’s expectation of higher interest rates. 

Fed officials have also noted that the surge in 10-year yields on the open market to nearly 5% has also done some of the bank’s heavy lifting in restricting liquidity.

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