October 28, 2021

Daily U.S. Session Watchlist: EUR/USD

 The ECB and Uncle Sam’s first GDP reading are up today!

How will the releases affect EUR/USD’s short-term downtrend?

Before moving on, ICYMI, today’s Asia-London session watchlist checked out EUR/JPY’s downtrend ahead of the Bank of Japan (BOJ) and European Central Bank (ECB)’s policy decisions. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

WTI crude down 4% from 7-year high after EIA report of higher inventories

Japan’s retail sales beat estimates as shoppers defy virus fears

Bank of Japan lowers outlook for growth & inflation, highhlights need for reforms

Australia export prices climb 6.2% on quarter in Q2

German unemployment fell more than expected in October

Euro hovers ahead of ECB meeting, yen looks past BOJ doves

Upcoming Potential Catalysts on the Forex Economic Calendar:

ECB’s monetary policy decision at 11:45 am GMT

ECB’s presser at 12:30 pm GMT

U.S. advance Q3 2021 GDP at 12:30 pm GMT

U.S. initial jobless claims at 12:30 pm GMT

U.S. pending home sales at 2:00 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: EUR/USD

Did central bank drama peak at the Bank of Canada (BOC)’s policy surprise earlier this week?

All eyes will be on the European Central Bank (ECB) as President Lagarde and her team navigate issues such as global supply and demand issues as well as higher consumer prices.

Markets don’t expect the ECB to make policy changes so traders will look to Lagarde’s presser for clues on the central bank’s growth and inflation outlook and maybe their tapering timeline.

Meanwhile, the U.S. will print its first GDP reading for Q3 2021. Word around is that the Delta variant, Hurricane Ida, and less fiscal stimulus have cut into the economy’s strong growth from the previous quarter.

Will the dollar trade as a safe-haven today? A much slower U.S. GDP reading could spook traders into pricing in slower global growth outlook.

But don’t discount the ECB’s impact just yet! If Lagarde hints that they’re getting uncomfortable about higher prices, then at least some traders will be hawkish enough to propel EUR/USD to the top of its channel on the 1-hour time frame.

If the ECB sticks to its wait-and-see plan, however, or if today’s U.S. GDP report highlights the Fed’s plans to taper this year, then EUR/USD can trade below its trend line support and complete its bearish flag pattern on the chart.