Article rewritten from: “This week, EURUSD faces key data as August ends” by Victor Argonov, originally published on Alpari.com.
Title: EUR/USD Faces Critical Data Releases as August Concludes: Key Factors for Traders
Author: Victor Argonov
Source: Alpari.com (https://alpari.com/en/analysis/market-analysis/this-week-eurusd-faces-key-data-as-august-ends/)
As the month of August concludes, market participants trading the EUR/USD currency pair are closely watching several pivotal data releases that have the potential to drive volatility in the short term. Macroeconomic indicators, central bank policy expectations, and geopolitical tensions constitute the backdrop for this week, with investors seeking clarity on the future path of interest rate movements from both the Federal Reserve (Fed) and the European Central Bank (ECB).
This article analyzes the critical economic events of the week, their expected impact on the EUR/USD pair, and the potential scenarios traders should watch for.
Weakening Euro Despite ECB Expectations
Against a backdrop of multiple factors, the euro is exhibiting minor weakness heading into the final days of August. Notably, this depreciation comes even as market participants weigh the possibility of a further rate hike from the ECB. The current situation suggests that economic data and risk sentiment are exerting a larger influence on currency movements than rate expectations alone.
According to recent data, the EUR/USD pair has been hovering below 1.0850, with bears managing to maintain control for several sessions. Despite Federal Reserve Chair Jerome Powell not delivering an explicitly hawkish tone during his Jackson Hole symposium speech, the US dollar remains defensive, pulling the euro lower. Investors were interpreting the Fed’s messaging as data-dependent but leaning toward maintaining higher rates until inflation is fully under control.
Key Risk Events for the Week
Several crucial US and Eurozone data releases are expected through the remainder of the week. These data will play a key role in determining the market’s mood and the potential direction for EUR/USD. Below are the most influential events:
1. U.S. JOLTS Job Openings Report (Tuesday)
– The Job Openings and Labor Turnover Survey (JOLTS) is closely watched by the Fed to assess labor market tightness.
– A strong report could suggest the Fed still has work to do in cooling the labor market, which might strengthen the dollar.
– An unexpected drop may increase expectations that the Fed could pause hikes at the next meeting.
2. Eurozone Inflation Data (Thursday)
– This release includes the region-wide Consumer Price Index (CPI) for August.
– Both headline and core inflation figures will be crucial in shaping expectations regarding possible action from the ECB.
– Persistent inflation would reinforce calls for another policy rate hike.
– Conversely, a deceleration in inflation may weaken the case for further tightening, exerting pressure on the euro.
3. U.S. PCE Price Index (Thursday)
– The Personal Consumption Expenditures (PCE) index is the Fed’s preferred measure for tracking inflation.
– Core PCE will be particularly significant, with the Fed seeking signs of re-anchoring inflation expectations toward the 2% target.
– A surprise on the upside may revive hawkish sentiment and trigger further USD strength.
– A downside surprise could lower odds for a rate increase in September.
4. U.S. Non-Farm Payrolls (Friday)
– The August jobs report is widely considered one of the most important labor indicators for policymakers.
– Strong job creation and wage growth figures could renew worries about inflationary pressures.
– Weaker jobs data may support the idea that the current policy rate is sufficiently restrictive, thereby weighing on the US dollar.
5. Eurozone Economic and Industrial Data
– Supplemental releases on retail sales, manufacturing, and business confidence will provide broader context for ECB decision-making.
– Any indication of economic slowdown or recession risks in key Euro
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