FX.co ★ EUR/USD: Preview of the week

New day, new week, new month. March is behind us – volatile, but essentially futile. Trading began at 1.0804 and ended at 1.0794. Meanwhile, the high of the past month was recorded at 1.0982. In other words, the pair made a full circle and returned to its previous positions. The closing price on the monthly timeframe practically coincides with the opening price. The bullish attack failed, but sellers couldn't turn the situation in their favor either. So, in the final tally, it's 0:0. Or 1:1, depending on one's preference.

Today is already April. And there won't be time to build momentum: as they say, hit the ground running. Significant reports, speeches by Federal Reserve representatives. Spring heat begins.

Monday

Today, April 1st, the Catholic world celebrates Easter, so almost all European trading platforms are closed.

The most important report on Monday will be published in the U.S. during the American session. We will learn the March value of the ISM Manufacturing Index. In December and (especially) January, it showed an upward trend, reaching 49.1 points. However, in February, the index unexpectedly and quite sharply declined to 47.8. In March, growth is expected again, albeit modest – to 48.5 points. If the index again falls into the red zone, the dollar will come under significant pressure. It is worth noting that this indicator has been in the contraction zone (i.e., below the 50-point target) since December 2022, so further decline may provoke quite strong volatility, as it did a month ago.

Tuesday

On April 2nd, the final assessment of the March PMI indices will be published. No surprises here. The final assessment should match the initial one.

We will also learn about the inflation dynamics in Germany. According to forecasts, the overall consumer price index will reach 2.2% year-on-year (the lowest value of the indicator since May 2021). The Harmonized CPI should also demonstrate a downward trend, reaching 2.4% year-on-year. It is worth noting that German data often correlate with the overall European data, so it can be assumed that the March inflation growth in the eurozone (the report will be published the next day) may also disappoint EUR/USD buyers.

During the American session, Job Openings and Labor Turnover Survey (JOLTS) data on the number of job openings will be released in the United States. In January, the number of vacancies changed slightly, amounting to 8.86 million. According to forecasts, this indicator will reach 8.79 million in February. This indicator will only provoke volatility in the pair if it significantly deviates from the forecasted value.

Besides the publication of macroeconomic reports, Wednesday expects the speeches of several Federal Reserve representatives: Board of Governor member Michelle Bowman, New York Fed President John Williams, Cleveland Fed President Loretta Mester, and San Francisco Fed President Mary Daly. Since all of them have voting rights in the Committee, their comments will provoke significant volatility in the EUR/USD pair. Their assessment of the core PCE index is of particular interest, which was published last Friday. I remind you that this key inflation indicator once again demonstrated a downward trend (for the seventh consecutive month), reaching 2.8% year-on-year.

Wednesday

The main event of this day is the publication of inflation data in the eurozone. According to forecasts, the overall consumer price index will decrease to 2.5% in March. I remind you that until November of last year (inclusive), the overall CPI consistently declined, dropping to 2.4%. But in December, it unexpectedly accelerated to 2.9%. Then it began to slowly slide down again: January – 2.8%, February – 2.6%. If the index comes out at the forecast level (or lower) in March, we can talk about a formed trend. The core consumer price index, excluding energy and food prices, has been actively declining for seven consecutive months, decreasing to 3.1%. March could be the eighth month in this series: according to forecasts, this indicator will be at 3.0%.

In the U.S., the ISM non-manufacturing business activity index will be published. According to the majority of experts, in March, the indicator will be practically at the same level as in February (52.7 vs. 52.6, respectively).

The Fed will also have its say. On Wednesday, a speech by Fed Chair Jerome Powell is expected, as well as two members of the Board of Governors – Michael Barr and Adriana Kugler.

Thursday

On Thursday, the minutes of the March meeting of the European Central Bank will be released. Recently, many ECB representatives have noticeably softened their position – almost all of them have advocated a rate cut at the June meeting in one way or another. The tone of the minutes of the March meeting may reinforce (or weaken) the "dovish" sentiment in the market, especially since this document will be published the day after the publication of key inflation data in Germany and the eurozone.

Also on Thursday, a speech by Richmond Fed President Thomas Barkin (with voting rights in the Committee this year) and Chicago Fed President Austan Goolsbee (without voting rights) is expected.

Friday

On the last trading day of the week, all traders' attention will be focused on the March Nonfarm Payrolls. I remind you that a month ago, the U.S. labor market left a rather mixed impression. The February report reflected modest wage growth and an unexpected increase in unemployment to 3.9%. The indicator of nonfarm payrolls in February came out in the green zone (275,000, with a forecast of growth of 198,000), but the results of the previous two months were revised downwards, totaling -167,000

According to preliminary forecasts, in March, the unemployment rate will remain at the February level (3.9%), and the number of nonfarm payrolls will increase by 205,000. The pace of average hourly wage growth is expected to slow down to 4.1% year-on-year. If the Nonfarm Payrolls come out at the forecast level (not to mention the "red zone"), then June remains the most likely date for the first Fed rate cut.

Also on Friday, it will be interesting to hear from Alberto Musalem. This is his first speech as the head of the St. Louis Fed. He replaced James Bullard, who led the bank for the past 15 years.

Conclusion

So, as we can see, volatile days await us ahead - the tone of trading will be set not only by the Fed, but also by key reports in the field of inflation (Germany, Eurozone) and the U.S. labor market (JOLTS, Nonfarm Payrolls). Today stands out from the general course of events due to the celebration of Catholic Easter - the main drive in the currency market will start from Tuesday onwards.

The nearest support level for the EUR/USD pair is located at 1.0760 (the lower Bollinger Bands line on the daily chart). The resistance level is 1.0830 (the upper Bollinger Bands line on the four-hour chart).