EUR/USD Teeters as GDP and CPI Awaited

The US dollar may soar in the week ahead as the ongoing war and Fed’s hawkish stance continue to trigger risk aversion. The anti-risk Japanese Yen and Swiss Franc may also spike, though the greenback’s unprecedented liquidity may give it an advantage over its counterparts. 

Last week saw how the markets staggered on Fed’s hawkish tilt, S&P 500 gapped lower though ended the day in the positive. Investors rushed to the safety of the US dollar, Swiss Franc and Japanese Yen, while commodity currencies Swedish Krona, Norwegian Krone, Australian and NZ dollars were hit hard. 

The Eurozone CPI and GDP data will take center stage this week and could unsettle the Euro if the results fuel concerns of a rate hike from ECB. 

The EUR/USD fell as money markets upped their bets on ultra-aggressive rate rises this year. The US GDP and personal income/spending statistics will be released this week, which might add to the pair’s volatility if the figures bolster the Fed’s hawkish outlook.

The pair is currently trading at 1.0697, the lowest level since March 2020. Monday saw its biggest one-day drop since March 31, 2022.

There might be a reversal coming up, indicated by positive RSI divergence, though this is not guaranteed. The downtrend could still continue despite the divergence shown in the index.