Start your trading week right by prepping for these top-tier catalysts and checking out my potential trade setup.
Don’t forget to review which factors drove forex market price action last week, too!
Major Economic Events:
Flash PMI readings (starting Mar. 24, 8:15 am GMT) – It’s the third week of the month, which means that manufacturing and services PMIs from European nations are due.
France is up first and would likely report mixed figures, with its manufacturing PMI slated to dip from 45.6 to 45.5 and its services PMI likely to post an improvement from 56.1 to 56.4.
Germany is expected to show an uptick from 60.7 to 60.8 for its manufacturing PMI and an increase from 45.7 to 46.4 for its services PMI, reflecting a slower pace of contraction.
The aggregate readings for the eurozone would likely reflect no change in the manufacturing PMI at 57.9 and a climb in the services PMI from 45.7 to 46.1. Weaker than expected results, however, could emphasize the impact of the latest round of lockdowns on business activity.
Meanwhile, the U.K. is also set to print its industry PMIs, possibly posting a dip from 55.1 to 55.0 for the manufacturing sector and an improvement from 49.5 to 50.7 for the services sector.
SNB policy statement (Mar. 25, 8:30 am GMT) – No actual changes to interest rates are expected, but franc traders would likely have their guard up for potential currency intervention or jawboning.
Keep in mind that the SNB is keen on keeping the franc weak, as this brings an advantage for exports and overall trade. The Swiss central bank typically adjusts the EUR/CHF peg or increases their foreign currency reserves in order to achieve this.
However, interfering in FX moves might not be an urgent matter for the SNB lately since the franc has been on the decline mostly on account of risk-taking.
Central bankers’ speeches – There’s no shortage of commentary from top policymakers this week, and any changes in their biases could mean big market moves!
Fed head Powell has a busy first half of the week, as he is scheduled to give THREE speeches.
First up is his participation in a virtual panel discussion about central bank innovation held by the BIS on Mar. 22, 1:00 pm GMT. Next are his testimonies with Treasury Secretary and former Fed head Janet Yellen before the House Financial Services Committee on Mar. 23, 2:00 pm GMT and on Mar. 24, 2:00 pm GMT.
BOE Governor Bailey is due to participate in a panel discussion titled “Unlocking Investment for Net Zero” at an online event hosted by The Economist on Mar. 23, 11:50 am GMT.
ECB head Lagarde will be speaking at an online conference hosted by Project Syndicate, the European Investment Bank and the European Commission on Mar. 24, 3:45 pm GMT.
Finally, BOJ Governor Kuroda is scheduled to speak at the International Research Workshop on Climate-related Financial Risks on Mar. 25.
Forex Setup of the Week: EUR/CHF
I’ve got my eyes locked on this neat descending channel setup on the 1-hour chart of EUR/CHF, as price is testing the resistance.
Technical indicators are hinting at a continuation of the slide, with the 100 SMA below the 200 SMA and Stochastic having plenty of room to head south.
The upcoming flash PMI releases from the eurozone might be a good catalyst for a continuation of the slide since most of the figures could post declines. Heck, not even upside surprises might convince bulls to charge, as another wave of restrictions is keeping a lid on business activity!
I’m not expecting big surprises from the SNB since the franc has been on weak footing lately, so there could be room for a relief rally for the Swiss currency later on.
