Key EUR Data on Watch

The sell off in EURUSD has paused for now, with the pair seeing better demand across early European trading on Monday. However, the market looks highly vulnerable to fresh downside this week as traders brace for a slew of key eurozone and US data. Preliminary eurozone GDP on Wednesday, followed by flash eurozone CPI on Thursday are both likely to reflect further weakness in the eurozone economy, keeping ECB easing expectations entrenched. Inflation is expected to stay below the bank’s 2% target level. If seen this, this should revive EUR selling through the end of the week.

US Data Due Too

Alongside EUR data, we also have US advanced GDP, core PCE and the headline NFP release for the week. GDP and PCE will of course be closely watched, with any data-surprises likely to drive volatility. However, the main focus will be on US jobs data on Friday. The headline NFP is forecast at a very low 111k, down from 243k prior. Given the low forecast there is plenty of room for a fresh upside surprise. If seen, this will weigh further on Fed easing expectations through year end, boosting USD. For EURUSD bears, the ideal scenario this week will be soft EUR data and strong USD data, pushing the pair lower into next week.

Technical Views

EURUSD

The sell off in EURUSD has stalled for now into the rising trend line from YTD lows, ahead of the 1.0724 level. Momentum studies are turning higher, suggesting room for a recovery rally here. While price holds below 1.0937 however, focus is on a continued push lower and eventual test of 1.0515 next.