The final week of September is ahead. The key events of the month for the EUR/USD pair have already taken place: the European Central Bank and the U.S. Federal Reserve have delivered their verdicts, and the most critical reports have reflected the dynamics of the main indicators of the U.S. economy and the Eurozone economy. But this doesn't mean the upcoming week will be "uneventful" or dull. On the contrary, we are likely to witness relatively high volatility, as interpreting the facts is often more complex than the facts themselves. In the coming week, members of the Fed and the ECB will be "deciphering" the results of the September meetings, either strengthening or weakening the market's dovish expectations. In addition, towards the end of the five-day trading week, the U.S. will release a key inflation indicator – the Core PCE Index. But let's take it step by step.
Monday
The PMI indices will be released on Monday at the start of the European trading session. We will learn the preliminary estimates for September. According to forecasts, a slight decline is expected. For example, the Manufacturing PMI in Germany is expected to come in at 42.3. On one hand, this is a minimal shift downward (the August figure was 42.4), but on the other hand, this would indicate a forming downward trend, as the index has been declining for the past three months (September should mark the fourth consecutive month). The Services PMI is expected to remain in the expansion zone (in France, Germany, and the Eurozone) but will also show a downward trend. For instance, the German index is expected to decrease from 51.2 to 51.0.
On the other hand, the Manufacturing PMI in the United States is expected to show positive dynamics, rising from 47.9 to 48.6. However, the dollar will receive significant support only if the indicator leaves the contraction zone, meaning it surpasses the 50.0 level.
Raphael Bostic, President of the Atlanta Fed; Neel Kashkari, President of the Minneapolis Fed; Austan Goolsbee, President of the Chicago Fed; and Piero Cipollone, a member of the ECB's Executive Board, will be the main speakers on Monday.
Tuesday
On this day, the IFO indices will be released in Germany. It's worth recalling that the ZEW indices were recently published, reflecting negative dynamics. All report components were in the red zone, indicating growing pessimism among entrepreneurs. Judging by preliminary forecasts, the IFO indices are expected to confirm these trends. In particular, the business climate indicator is expected to fall to 86.1 points (the lowest since February this year), and the economic expectations indicator to 86.3 (also a 7-month low). The euro will be under significant pressure if these indicators come out in the "red" amid such weak forecasts.
The Conference Board's Consumer Confidence Index will be released during the U.S. session on Tuesday. The indicator has been rising for the past two months and is expected to increase to 103.5 points in September (the highest level since February 2024).
Michelle Bowman, a member of the Fed Board of Governors, and Joachim Nagel, a member of the ECB's Governing Council, will be the main speakers on Tuesday.
Wednesday
The economic calendar for Wednesday is not filled with events that could significantly impact the EUR/USD dynamic. The only point of interest might be the data on new home sales in the United States.
In addition, a speech by Fed Board Governor Adriana Kugler is expected on Wednesday.
Thursday
This is probably the week's most important day for EUR/USD traders. The Federal Reserve Bank of New York will organize an economic conference, and many Fed representatives will speak on this day, including Fed Chair Jerome Powell, John Williams, Michael Barr, Lisa Cook, Michelle Bowman, Susan Collins, and Neel Kashkari.
It's crucial to note that following the September meeting, the Fed not only lowered the interest rate by 50 basis points but also indicated an additional 50 bps cut by the end of the year (according to the updated dot plot forecast). However, at the post-meeting press conference, Powell weakened the dovish sentiment by stating that the September decision was not 'standard,' meaning it does not set the pace for monetary easing. He emphasized that everything would depend on incoming data. Still, the majority of the Committee members forecasted an additional half-point rate cut this year. Given this setup, the rhetoric of the Fed officials could potentially have a significant impact on the dollar and, accordingly, on the EUR/USD pair.
Representatives of the ECB have also been invited to the conference. In particular, ECB President Christine Lagarde, ECB Vice President Luis de Guindos, and Executive Board Member Isabel Schnabel will express their positions. Their rhetoric could also influence the EUR/USD pair. Recently, ECB officials have been delivering "moderately hawkish signals," questioning the appropriateness of further rate cuts in October or later this year. Therefore, the stance of the ECB leadership is of utmost importance in this context.
In addition, on Thursday, the final estimate of the data on US economic growth for the second quarter will be published. The result was revised upward after the second estimate (from 2.8% to 3.0%). According to preliminary forecasts, the final estimate will match the second one. However, the dollar will receive significant support if the result unexpectedly exceeds 3.0%.
Another important release on Thursday is the volume of orders for durable goods. Following a substantial increase in July (with the total volume rising by 9.9%), a significant decline of 2.7% is expected.
Friday
On Friday, the US will release the core PCE index, a key inflation indicator closely monitored by Fed members. It decreased to 2.6% year-over-year in May, marking the slowest growth rate since March 2021. In both June and July, it remained at this level. According to preliminary forecasts, the figure is expected to be at 2.6% again in August. If the index moves downward, discussions about the possibility of a 50 bps rate cut by the Fed in November could resurface. However, the assessment of this indicator will largely depend on the stance expressed by Fed representatives at the conference mentioned above.
Conclusions
If the scheduled macroeconomic reports meet the forecasts, the US dollar will likely win, while the euro will come under pressure. But there's a catch: trading will be primarily influenced not by macroeconomic data but by the comments of Fed and ECB officials. The EUR/USD pair will move up or down depending on their hawkish or dovish tone. All other fundamental factors will play a secondary role.
From a technical perspective, the EUR/USD pair is in between the middle and upper lines of the Bollinger Bands on the daily and weekly charts, as well as above all lines of the Ichimoku indicator, which has formed a bullish Parade of Lines signal on the W1 timeframe. The nearest target for upward movement is 1.1210, which corresponds to the upper line of the Bollinger Bands on the daily chart. The support level is at 1.1100, coinciding with the middle Bollinger Bands line and the Tenkan-sen line on the daily time frame.
