EUR/USD: Powell, PCE inflation and NFP in the sights

EUR/USD stalls while waiting for Powell, PCE inflation and NFP

EUR/USD continues its short-term seesaw in its range between around $1.02 and $1.05, but could pull back as Jerome Powell is expected to be on the alert this afternoon. Fed Chairman to speak at Brookings Institution on ‘the economy, inflation and the labor market’ and he could use this intervention to calm the market’s enthusiasm for a quick ‘pivot’ of the Fed, as he had done at the Jackson Hole symposium in August. Jerome Powell could say, for example, that policy rates should stay high longer than expected to bring inflation back to the central bank’s target.

After the Fed, it will be the turn of PCE inflation in the United States to pace the markets on Thursday. The Atlanta Fed’s Consensus and Inflation Nowcasting agrees that underlying price will rise 0.3% in October, down from the 0.5% rise the previous month, but it’s still too high , around 3.6% on an annualized basis.

The week will end with the publication of the US employment report, which should also punctuate the markets. Job creations are expected at 200,000 in November, against 261,000 in October. A higher-than-expected reading would improve the economic outlook, which could benefit the dollar as it would boost the chances that the Fed will remain aggressive in its monetary tightening.

EUR/USD daily price chart – key levels


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