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"It's either feast or famine" is how one could describe the schedule of the most important macroeconomic releases for the EUR/USD pair. The economic calendar of the previous week was overloaded with significant events. Reports on eurozone inflation, euro area GDP, the ISM manufacturing index, Nonfarm Payrolls, and the Federal Reserve's July meeting... Such a concentration of important fundamental factors can sometimes be confusing: the market may not have time to digest the information, formulate a unified opinion, and decide on the vector of price movement. For instance, last week, the EUR/USD pair "wandered" within the range of 1.0790 – 1.0850 right up until the release of Friday's Nonfarm Payrolls data, which tipped the scales in favor of the EUR/USD bulls.
This week will not create such problems for EUR/USD traders—the economic calendar isn't packed with significant events or reports. However, this does not mean the EUR/USD pair will hibernate in the summer: certain triggers can provoke increased price volatility. Let's take a look at the economic calendar for the week.
Monday
July PMI indices for the manufacturing and services sectors will be published in key EU countries during the European session on Monday. We will learn the final assessment of these indicators, which is expected to match the initial estimates. This release could influence EUR/USD only if the July indices are significantly revised—either downward or upward.
During the American session in the U.S., the ISM Services PMI index will be released. Arguably, this is the most important report of Monday, capable of provoking strong volatility in EUR/USD. Especially since, according to preliminary forecasts, the indicator is expected to return to the expansion zone. The index unexpectedly fell to 48.8 points in June. It is supposed to exceed the 50.0 target again, reaching 51.4 in July. However, if the indicator falls short of the 50-point mark, the dollar will be under additional pressure. Remember, last week's manufacturing ISM index also fell into the red, dropping to 46.8 in July (the lowest value of the indicator since November 2023). If the services sector also underperforms, dollar bulls will be hit again.
Tuesday
Tuesday's economic calendar is almost empty for the EUR/USD pair. The U.S. foreign trade report might attract some interest, but it usually has a limited impact on the greenback.
However, a speech by the San Francisco Federal Reserve President, Mary Daly, could trigger a wave of volatility. In one of her recent speeches, she stated that the U.S. economy is on a path where "one or two rate cuts this year would be more or less appropriate." She also expressed confidence that inflation would gradually decrease and the labor market would slow down. All this was said before the release of the Consumer Price Index for June and the July Nonfarm Payrolls, which reflected a slowdown in inflation and a cooling labor market. Therefore, this week, her rhetoric is likely to soften even further; she might talk about the prospects of two rate cuts in a more definitive manner. Daly has a voting right in the Committee this year, so her words, as they say, "carry weight."
Wednesday
Data on industrial production will be published in Germany during the European session on Wednesday. This indicator sharply decreased in May (-2.5% m/m, -6.7% y/y), but a positive trend is expected in June: the figure should rise by 1.1% monthly. If the indicator meets or exceeds the forecast, the euro will receive additional support, especially against the backdrop of decent data on the Eurozone economy (in the second quarter) that was published last week.
We will also see trade data from China and Germany on Wednesday. In light of China's slowing economic growth, special attention will be paid to the Chinese data.
Thursday
On Thursday, it is worth paying attention to the weekly data on initial jobless claims. Over the last three weeks, the figure has not dropped below the 230,000 mark, indicating rising unemployment (as the latest Non-Farm Payrolls suggested). Last week, the figure jumped to 249,000 (the strongest growth rate since the beginning of August 2023). According to forecasts, this week's increase will be around +245,000. Even if the figure meets the forecast (not to mention if it's worse), the dollar will be under additional pressure.
Also on Thursday, Thomas Barkin, the head of the Richmond Fed, who has a voting right in the FOMC this year, will give a speech. He is considered a hawk, so any (possible) softening of his stance could heavily impact the US dollar.
Friday
On this day, the most important report for the EUR/USD pair will be published in China. A key report on inflation in China will be released during the Asian session. In June, inflation in China unexpectedly slowed to a low since March (0.2%). According to forecasts, the figure for July is expected to rise to 0.3%. At the end of last year, the Chinese economy experienced the most deflationary pressure in the past three years, and very weak domestic demand cast doubt on the economic recovery in 2024. However, the CPI has been in positive territory since February, showing small growth. Suppose in July, contrary to forecasts, the indicator turns out to be below zero. In that case, market concerns will increase regarding the future of the world's second largest economy (especially against the backdrop of weak GDP data for China in the second quarter). An increase in risk-averse sentiments may support the safe-haven dollar. Conversely, if the report is positive, the greenback will be under pressure amid increased interest in risk assets.
Conclusions
The economic calendar for the week is not filled with important events, but given the loud events of the past week, every report (even secondary) and every comment by a Fed representative will play an important role for EUR/USD traders.
Buyers of the pair should aim to surpass and consolidate above the levels of 1.0930 and 1.0950 (the upper Bollinger Bands lines on D1 and W1, respectively) to position themselves in the 1.0950-1.1000 range. This development would pave the way for a future test of the 10th figure. In my view, sellers can currently only anticipate corrective pullbacks to the middle Bollinger Bands line on the daily chart (1.0850). A bearish reversal is only likely in the event of unforeseen circumstances, such as an escalation in the Middle East. Barring such geopolitical disruptions, the pair is poised to maintain its potential for further growth.
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