€ Euro/USD Fundamental Analysis | Economic Docket and Events

With the European Central Bank's September Governing Council meeting in the books, Euro traders' attention will shift to the ECB's October 28 meeting and, more importantly, the December 16 meeting. As a result, it is now "active," implying that the European Central Bank's support for the Eurozone economy may be reduced as a result of the December meeting in particular. If the UK inflation data on Wednesday is lower than expected, the EUR/GBP is well positioned to rise the following week, with 0.86 as a clear target. However, as the year progresses, the EUR/USD is likely to rise, with any stronger-than-expected activity or inflation statistics supporting the notion that tighter Eurozone monetary policy is on the way, and any weaker-than-expected numbers being dismissed as outliers.

Comment:

Unfortunately, Eurozone industrial production for July will be released on Wednesday, trade for August on Thursday, and final inflation on Friday. In any case, with the European Central Bank raising its inflation target for 2022 and "recalibrating" its Pandemic Emergency Purchase Program, the Euro's most likely path is upward, especially if the ECB's hawks continue to press for immediate action. The EUR/USD has been rising since August 20, and there appears to be little stopping it from rising further to around 1.19, which is not only a "round number" but also represents the week's highs – assuming, of course, that risk sentiment does not turn sour.