The euro/dollar pair continues trading sideways, sharply reacting to the information flow. During the Asian trade, the pair managed to recoup some of its losses recorded on Friday. The pair climbed by 50 pips to hover around 1.1350. In fact, the price continues trading sideways despite high volatility. Last week, the pair indicated its high of 1.1430 and the low of 1.1280. However, neither buyers nor sellers managed to benefit from the price impulse. As a result, the pair closed the week at 1.1360.
This week, there will be no macroeconomic data that may affect the euro/dollar pair. The most important report will be disclosed on Friday. It is the personal consumption expenditures price index. It is the most important inflation indicator monitored by the Federal Reserve. Its figures may cause high volatility amid US dollar pairs. Notably, it may boost either the greenback or the other currencies. According to the preliminary estimates, the report will point to a further rise in the US inflation.
In December, the indicator climbed to 4.9% on a yearly basis, reaching the highest pace since 1989. In January, the indicator's figures may even exceed the previous ones, hitting 5.1% year-over-year. Such a result may point to a rise in consumer spending amid limited supply. Americans are spending their savings, thus accelerating inflation and causing a more hawkish approach in the Fed's actions. The US dollar may receive significant support if Friday's data at least meets the forecast.
All other macroeconomic reports are of secondary importance. Today, the US market is closed because of the celebration of Presidents' Day. Today, only FOMC Member Michelle W. Bowman will provide a speech. Traders should also pay attention to the eurozone PMI reports since the indicators may increase compared to January.
On Tuesday, Germany is going to disclose its Ifo reports. The business climate indicator is expected to show a positive dynamic, thus supporting the euro. Meanwhile, the US is planning to publish its consumer confidence data. It is an important indicator, whose reading depends on households' confidence in the current state of the economy and its development in the future. According to preliminary estimates, the indicator may decline to 110.3 points.
On Wednesday, the eurozone inflation report is slated for release. Most analysts suppose that the final data will meet the initial estimate. That is why traders are likely to ignore the data.
On Thursday, all eyes will be turned to the US GDP report for the fourth quarter of 2021. According to the forecast, the reading will be upwardly revised to 7.1% from 6.9%. In addition, FOMC Member Loretta Mester is going to provide a speech.
On Friday, in addition to the personal consumption expenditures price index, the US will also reveal its durable goods orders report. Economists suppose that both the core and total indicators may surge.
In general, all the macroeconomic reports that are slated for release this week are of secondary importance. That is why trading sentiment will depend on other fundamental factors, primarily geopolitical ones.
Today's rise in the euro/dollar pair could be explained by traders' interest in risky assets. Frightening news about the situation in the Donetsk People's Republic disclosed at the weekend was replaced by encouraging news on Monday. The fact is that Vladimir Putin and Joe Biden accepted Macron's proposal to hold a summit on security and strategic stability in Europe. According to representatives of the French president, Lavrov and Blinken will prepare questions for the summit on February 24. Against this background, traders' interest in risky assets increased, thus exerting pressure on the safe-haven greenback.
In fact, the meeting between the presidents of Russia and the US is the main event of the week. Ahead of the event, traders will hardly open big positions. That is why when the price approaches 1.1400, it is possible to open short positions with the first target at 1.3300 and the main target at 1.1305.
