- EUR/USD is heading for weekly gains but off highs.
- The dollar has no clear direction on the Friday before the Fed week.
- Wall Street posts big gains.
EUR/USD hovers around 0.9950, unchanged on the day and gaining on the week. The Euro recently rose as high as 0.9990 but quickly pulled back, approaching daily lows, as the Dollar moves sideways across the board.
The dollar is trading with no clear direction, even after Friday’s US data and ahead of a critical week. DXY is up 0.25% (mainly due to recovery in USD/JPY) and US yields are off highs. On Wall Street, stock prices rise more than 1.25% on average.
On a weekly basis, EUR/USD is about to finish with a 100 point gain, but the fact that it is down more than 150 points from the high is a negative sign for Euro bulls. The pair reached a high near the 20-week moving average and then started to move lower.
Inflation versus growth
Data published on Friday showed a new record for inflation in Germany in September, with an annual rate of 10.4%. “There is no relief in sight, and the inflation rate is likely to only fall next year as energy prices are unlikely to rise as strongly as they have this year, also due to intervention. However, underlying price pressure is likely to remain strong. Today’s price data confirms our forecast for a double-digit inflation rate in the euro area in October,” analysts at Commerzbank said. .
In the US, the Core PCE deflator stood at 5.1% in September, slightly below the 5.2% market consensus. It’s not a new all-time high, but it’s still high. Market participants are still pricing in a 75 basis point hike at next week’s FOMC meeting.
Next week’s economic calendar also includes eurozone inflation and the official US jobs report. Volatility seems guaranteed.
Technical levels
Source: Fx Street
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