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

EUR/USD stalls as it awaits 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 call this afternoon. Fed chairman to speak at the 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’ by the Fed, as he had done at the Jackson Hole symposium in August. Jerome Powell, for example, could say that key interest rates would have to remain 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 US to pace the markets on Thursday. The Atlanta Fed’s Consensus and Inflation Nowcasting agrees that the underlying price will rise 0.3% in October, down from the 0.5% increase the previous month, but still too high, around 3.6% on a year-over-year basis.

The week ends with the publication of the US employment report, which should also influence the markets. Job creation of 200,000 is expected 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 increase the chances that the Fed will remain aggressive in its monetary tightening.

EUR/USD Daily Price Chart – Key Levels

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