The upcoming week is set to be one of the "hottest" of October. In the final stretch of the month, key macroeconomic reports for EUR/USD will be released, both in Europe and the United States.
By the end of the week, the pair will either approach the base of the 1.07 figure, with a potential decline below the 1.0700 level or return to the 1.0840-1.0950 range with an outlook for further growth toward the 1.10 figure.
Monday
Monday's economic calendar is nearly empty, with European Central Bank Vice President Luis de Guindos' speech being the main point of interest. Earlier in October, he expressed concern over the weak growth of the European economy, stating that "downside risks remain" though economic recovery "should strengthen over time." If he reiterates these pessimistic views, the euro may face underlying pressure.
Additionally, on Monday, we will see how the currency market reacts to recent Middle East developments. Over the weekend, Israel launched a strike on Iran in response to an attack on October 1. Israel targeted military infrastructure, notably avoiding oil and nuclear sites, likely to prevent oil price surges. Iran's response remains to be seen, with Iranian media indicating retaliation, while Sky News Arabia reports Iran has informed the U.S. through a third party that it will refrain from responding to Israel's strike. The market's reaction to this escalation remains uncertain.
Tuesday
The most significant report on Tuesday will come from the U.S., where the Conference Board Consumer Confidence Index for September will be released. After increasing in July and August, the index sharply fell to 98.7 in September. Most experts expect a rebound in October to 99.2.
The U.S. will also release the JOLTS Job Openings report. After two months of declines in June and July, job openings rose unexpectedly in August to 8.04 million. For September, a slight decrease to 7.92 million is expected. The release could drive volatility in the pair if it significantly deviates from expectations.
Wednesday
We'll see preliminary data on U.S. economic growth for Q3 on Wednesday. The forecast suggests GDP growth of 3.0%, mirroring Q2. Meeting or exceeding this level is crucial for dollar bulls, as any slowdown could reignite expectations of a more aggressive easing pace by the Federal Reserve.
Another critical release, the ADP employment report, will also be out on Wednesday. This indicator often forecasts potential changes in the U.S. labor market and comes just two days before the official data. Early estimates do not favor the dollar, with an anticipated increase of only 101,000 jobs in the private sector. If the figure drops below the psychological 100,000 threshold, the dollar could face pressure ahead of the October non-farm payrolls.
Another notable Wednesday report is Germany's October inflation data. This serves as a preview for Eurozone-wide CPI data. German inflation is expected to rise by 1.8% year-over-year after two months of declines (down to 1.6% in September). The harmonized index is forecasted to increase to 2.0% from September's 1.8%. Such results could provide strong support for the euro.
Moreover, Eurozone Q3 GDP growth data will be released. Preliminary estimates suggest a year-over-year increase of 0.8%, up from 0.6% in Q2 and 0.5% in Q1, indicating an upward trend. If the data meet or exceed expectations, EUR/USD buyers will have a solid basis to strengthen their positions, significantly if German and Eurozone inflation data also accelerate.
Thursday
Thursday is also highly informative for EUR/USD traders, with key macroeconomic reports set to be released in Europe and the U.S.
We'll get crucial data on Eurozone inflation during the European session. Forecasts suggest the overall CPI for October will accelerate to 1.9% after a decline to 1.7% in September. An uptick in the Consumer Price Index will generally favor the euro. However, if inflation rises above the ECB's target range (over 2%), EUR/USD bulls could initiate a substantial "rally to the north." It's worth noting that the core index is expected to show a downward trend, slowing to 2.6%. If core CPI also rises contrary to predictions, the euro will gain additional (and significant!) support.
During the U.S. session, the core PCE index—a key inflation indicator closely monitored by the Fed—will be published. For two months (June and July), this index stood at 2.6% but increased to 2.7% in August. In September, it's forecast to remain at 2.7%. If it shows upward movement, dollar bulls may gain the upper hand, especially with rising core CPI and PPI indexes in the U.S.
Friday
On the week's last trading day, traders will focus on October's Nonfarm Payrolls (NFP). Last month, the U.S. labor market provided significant support for the dollar as all components of the September NFP report exceeded expectations. October's data will either confirm or refute this trend.
Most experts believe the unemployment rate will hold steady at 4.1%. However, job growth is expected to show weaker results, with only +111,000 jobs added. For context, September saw an increase of 250,000 jobs. The dollar could face heavy pressure if job growth falls below the 100,000 mark, especially given the weak ADP forecast.
The pro-inflation indicator—average hourly earnings growth—is expected to stay at September's level of 4.0%. For dollar bulls, this figure must not dip below 4%.
Another significant release on Friday is the ISM Manufacturing Index, which is expected to rise slightly from 47.2 to 47.5. This index could support the dollar only if it unexpectedly moves into the expansion zone, surpassing the 50-point target.
Conclusions
The economic calendar for the upcoming week is packed with important releases. Key macroeconomic reports can potentially drive high volatility in the EUR/USD pair. Preliminary forecasts are not in favor of sellers. According to most experts, inflation in Germany and the Eurozone will accelerate, while the U.S. labor market may weaken.
If key indicators meet forecasts, EUR/USD buyers could mount a significant counterattack, potentially pushing the pair toward the middle of the 1.09 range (1.0950 – the middle Bollinger Bands line on W1, aligning with the Kijun-sen line). However, if Eurozone inflation slows and Nonfarm Payrolls come out "in the green," the reaction could be much sharper in the other direction due to the element of surprise. In such a case, we might see a drop toward the support level 1.0720 (the lower Bollinger Bands line on the D1 timeframe) with the potential to test the 1.06 range.