This Week: Will EURUSD break above 1.120?

• EURUSD bulls struggling to conquer 1.12 mark since August
   
• EURUSD set for 3rd straight monthly gain
   
• Bloomberg model: 75% chance EURUSD to trade between 1.1049 - 1.1291 this week
   
• Key triggers: Eurozone CPI, US nonfarm payrolls

Will it be “third time’s a charm” for EURUSD bulls this week?

On two separate cycles over the past two months, the 1.120 psychological level has thwarted traders wishing to push the world's most-traded FX pair higher.

At the time of writing, on this final trading day of September 2024, EURUSD is also set for its third-consecutive monthly gain – its longest winning run so far this year (since Q4 2023).

This week, EURUSD bulls still need better-than-expected Eurozone data, or a more dovish-than-expected Fed this week.

Bloomberg’s model predicts a 75% chance that EURUSD will trade between 1.1049 - 1.1291 this week.

Events Watchlist:

• Monday, September 30th: Speech by Fed Chair Jerome Powell

This will be Chair Powell’s first live comments (as opposed to the pre-recorded ones delivered last week), since the Fed’s jumbo-sized 50-basis point rate cut on September 18th.

At the time of writing, markets are split (about 50:50) about the odds of another 50-bps Fed rate cut at its November meeting.

If Powell cracks the door wider for another outsized Fed rate cut, that could see EURUSD punching above 1.120.

Note also that, besides Chair Powell, 8 other Fed officials will be making public comments throughout the week.

• Tuesday, October 1st: Eurozone September consumer price index (CPI)

Economists predict that the headline CPI eased lower to 2% year-on-year (Sept 2024 vs. Sept 2023), compared to August’s 2.2% print.

Lower-than-expected CPI which paves the way for the European Central Bank to cut rates could drag EURUSD below its 21-day simple moving average.

Markets now predict an 87% chance of a 25-bps ECB rate cut on October 17th, with 50-bps in rate cuts total fully priced in by year-end.

Note however that Germany, the Eurozone’s largest economy, is due to release its own CPI prints the day prior (on Monday, Sept 30th).

Hence, EURUSD traders may have already triggered the larger CPI-related reaction on Monday’s Germany CPI release, as it often serves as a precursor to the broader Eurozone’s inflation data.

• Friday, October 4th: US nonfarm payrolls (NFP)

The Fed has already told markets that more attention will be paid to the US jobs market, rather than slowing inflation.

Hence, the NFP report is likely to trigger big moves across global financial markets.

Economists predict that the US labour market put in a stable shift in September:

• 146k new jobs added (similar to August’s 142k headline NFP number)
• unemployment rate unchanged at 4.2%.

A shocking deterioration in the US jobs market that forces the Fed into more aggressive rate cuts should see EURUSD securing a daily close above 1.120 for the first time since July 2023.

Here’s a comprehensive list of other key economic data and events due this week:

Monday, September 30

• JP225 index: Japan August industrial production, retail sales
• CN50 index: China September PMIs
• GER40 index: Germany September CPIs; speech by ECB President Christine Lagarde
• USD index: Fed Chair Jerome Powell’s speech

Tuesday, October 1

• JYP: Japan August jobless rate; 3Q manufacturing index
• AU200 index: Australia August retail sales
• EUR: Eurozone September CPI
• RUS2000 index: US August JOLTS jobs openings; September ISM manufacturing; speeches by Atlanta Fed President Raphael Bostic, Fed Governor Lisa Cook, Richmond Fed President Thomas Barkin, Boston Fed President Susan Collins
• Nike earnings

Wednesday, October 2

• EU50 index: Eurozone August unemployment
• US400 index: Speeches by Richmond Fed President Thomas Barkin, Cleveland Fed President Beth Hammack, St. Louis Fed President Alberto Musalem, Fed Governor Michelle Bowman

Thursday, October 3

• AUD: Australia August trade balance
• US500 index: US weekly initial jobless claims; speeches by Minneapolis Fed President Neel Kashkari, Atlanta Fed President Raphael Bostic

Friday, October 4

• SG20 index: Singapore August retail sales
• EURUSD: US September nonfarm payrolls