FX.co ★ EUR/USD. Approaching the 1.10 mark, but further growth is debatable

At the end of last week, the EUR/USD buyers loudly "slammed the door," completing the trading around the 1.09 mark – the first time since August. Just a few hours before the end of Friday's trading, the price surged, overcoming the resistance level of 1.0890. Although before that, the pair had moved sideways for two days, fluctuating within the range of the 1.08 figure. Such impulsive movements are inherently unreliable, especially since the bulls decided to counterattack at the end of Friday's trading. Therefore, the main intrigue of the upcoming week lies in a simple question – will traders be able to hold onto the peak, or will the pair return to the 1.0820-1.0890 range, within which it traded in the second half of last week? The question is by no means trivial because the development of the uptrend is at stake. If the price stays around the positions it reached, it may approach the main price barrier of 1.1000. Otherwise, the prospects for the uptrend will "blur," after which sellers will take the initiative.

It is worth noting that this isn't the bulls first attempt to conquer the 1.10 level. Look at the monthly chart of EUR/USD: since the beginning of this year, traders have literally tried every month to break through the defense and reach the main price barrier. However, the upward momentum faded either within the 0.9 figure or when crossing the 1.1000 mark. The bulls managed to climb to the 1.2 figure in July (this year's high is at 1.1276), but for just about two weeks. Afterwards, the pair fell, which was followed by another test of the 0.9 figure.

Therefore, this month's attack is "one of many." Whether this attack will end in failure (like all the others), or whether traders will still be able to turn the situation in their favor (by consolidating above the 1.1000 mark) is an open question.

The economic calendar for the upcoming week is not saturated with important events for EUR/USD. However, secondary reports can also have a corresponding impact on the pair's dynamics, especially if the results significantly differ from forecast estimates.

Monday

The Bundesbank will publish its monthly report. However, this document rarely influences the markets. On the other hand, the Chief Economist of the European Central Bank, Philip Lane, could potentially "stir up" the pair with his statements. In one of his recent interviews, he noted "some progress" in the central bank's efforts to reduce core inflation but, in his opinion, "it is not enough yet." I assume that on Monday, he will reiterate this thesis, indicating that the ECB does not intend to lower interest rates in the foreseeable future.

Tuesday

ECB President Christine Lagarde, and a member of the ECB's Executive Board, Isabel Schnabel, are expected to speak.

The minutes of the Federal Reserve's November meeting is one of the main releases of the day. I would like to remind you that after the November meeting, the dollar strengthened its positions as the Fed left the door open for further rate hikes. Fed Chair Jerome Powell said that the U.S. economy turned out to be "surprisingly robust," and inflation is "stubborn," so the central bank may need another interest rate hike. However, Powell effectively "tied" the prospects of tightening monetary policy to key macroeconomic indicators, reminding market participants that two more reports on U.S. inflation and two on the labor market will be published before the December meeting.

Since then, October Non-Farms and key inflation data for October have been published. Both reports were not on the greenback's side, so the Fed's minutes will not have any significant impact on the EUR/USD pair. Even if the document has a hawkish tone, traders will likely ignore it, as the November meeting took place before the release of October inflation data.

Wednesday

During the U.S. Wednesday session, data on initial jobless claims will be published. Last week, this indicator jumped to 231,000 (the highest value since August). Further growth will reflect "unhealthy trends" in the labor market, and this could exert additional pressure on the greenback.

In addition, on this day, we will learn about the October orders for durable goods in the U.S. A negative dynamic is expected here: the total volume should decrease by 3.2%, excluding transportation – grow by only 0.2%.

Also on Wednesday, ECB Executive Board member Frank Elderson will speak, and the eurozone consumer confidence indicator will be released (the indicator should demonstrate a positive dynamic but still remain in the negative territory).

Thursday

Thursday is a "PMI day." We will learn about the dynamics of business activity indices in the manufacturing sector and the services sector in Germany, France, Spain, and overall in the eurozone. According to the forecasts of most experts, overall positive dynamics are expected, but all indicators will remain below the key 50-point mark. However, if the October results surprise investors with a "green tint," the euro will receive additional support, even despite the indicators remaining in the contraction zone.

Friday

On the last trading day of the week, German indices from the IFO Institute will be published. The indicator of Germany's business climate should demonstrate positive dynamics, rising to 87.5 (the best result since June). The economic expectations indicator is expected to reach 85.7 (the best result since May). Such a result will provide background support for the single currency.

During the U.S. Friday session, we will learn the preliminary estimate of the manufacturing sector's business activity index in the U.S. for November. Last month, the indicator reached the key target of 50.0 (for the first time since April), but in November, according to forecasts, it should return to the contraction zone (49.5).

Conclusions

The upcoming trading week will answer the key question: are the bulls able to rise while the dollar is weak, or do they need another impetus?

Secondary economic reports are unlikely to provide the euro with proper support (or exert significant pressure on the greenback), so the pair will likely return to the range of the 8-figure, where it will drift while awaiting a strong information flow. In my opinion, the pair may demonstrate sustained growth (above the 1.1000 target) only in the case of a softened Fed stance. However, Fed officials still maintain a "moderately hawkish" position, insisting on maintaining a wait-and-see approach and rejecting the idea of lowering interest rates in the foreseeable future. If such an information background persists (which is quite likely), it will be challenging for the bulls not only to test the 1.1000 level but also to stay within the 9-figure overall.