Last week’s Nonfarm payrolls report gave the dollar a strong boost. The Greenback resumed upside momentum, causing the risk sentiment to change direction. Due to the NFP report coming in at 172.000 newly created jobs instead of the expected 82.000 positions markets seem to now focus on the upcoming rate decision of the Federal Reserve again. The economy continues to look good, at least on paper, and there seem to be no rush for the Central Bank to cut rates. Instead, markets seem to believe that rates will remain high in the United States, which causes the Greenback to remain strong.

Furthermore, this week will also feature rate decisions from the Bank of Canada as well as the European Central Bank. Also, traders shall take the consumer price index of the United States into consideration. A slight rise in prices is expected. The Consumer price index is expected to increase to 2.9%. Since the beginning of the year the figure has been rising from 2.6%, likely supporting the Fed in remaining on hold in terms of rate cuts. Other Central Banks started to increase rates again as the pressure of inflations remains sticky.

Important events this week:

– CA interest rate decision– it is expected that the Bank of Canada will leave rates on hold. The last rate cut has been implemented in October last year. With the rise of geopolitical tensions in April and the subsequent growing pressure of inflation in Canada rate hikes in the near future might follow. 

USDCAD weekly chart

The USDCAD currency pair is offering interesting insights. The pair is currently trading at the important technical resistance level of 1.3950. A break above that zone might unleash fresh upside momentum while a push lower could also be on the cards. Any hawkish communication of the Central Bank might support the Loonie, pushing this pair lower again. The positive trend might change direction in particular if the price will start to trade back below the level of 1.3800, where the 50- moving average level can be found, which also marks a strong support area. The rate decision will occur on Wednesday, 11^th of June. The BoC press conference will begin at 16:30 CET. 

– EU ECB interest rate decision– The European Central Bank is expected to behave slightly different. Due to the rise in inflation the ECB is expected to hike rates during this meeting. The Bank Is believed to raise rates from the current 2.15% to 2.40%. Due to the war against Iran energy prices have soared especially in the Eurozone. The bloc is in need to import oil and gas and such prices have risen sharply at the beginning of the second quarter this year. 

EURUSD weekly chart

Meanwhile, the USD started to gear up fresh momentum again last week. The EURUSD currency pair is now trading right on top of the important technical support level of 1.1500. A break of that zone might cause the pair to break much lower, as the 50- moving average level based on the chart above has already been broken. The EUR might get a boost, if rates will indeed be raised. Since the move is expected and might hence already be priced in such momentum might be limited. The rate decision will occur on Thursday, 11^th of June at 14:15 CET.