Markets on Edge: Data Heavy Week Meets Geopolitical Risk

This week is packed with important data, but geopolitics, especially tensions in the Middle East, may have a bigger impact on markets than economic numbers.

The week starts with the US ISM Manufacturing PMI today, which gives an early look at business activity, growth momentum, supply chain conditions, and possible signals for Federal Reserve policy. However, markets may not react strongly to it as attention is likely to stay on geopolitical risks.

On Tuesday, Eurozone CPI will be in focus after Germany’s inflation came in much weaker than expected at +0.2% month over month. A softer Eurozone reading is likely and mostly priced in. If inflation comes in as expected, it would support the European Central Bank’s cautious approach.

Friday’s US Non-Farm Payrolls report is the key event of the week. Payrolls, unemployment, and wage growth will give a clear picture of the US labour market and directly influence expectations for the Fed’s next interest rate decision.

For EUR/USD, short term weakness is possible due to market uncertainty and risk sentiment. However, the broader trend remains positive as long as the pattern of higher highs and higher lows stays intact. Strong support sits near 1.1650, where the 200 day moving average and a rising trend line meet. If this level holds, buyers are likely to stay confident despite any short term pullback.

EUR/USD Daily Chart