Monthly Forex News Events that Might Affect EURUSD Volatility – May 2017

Monthly Forex News Events that Might Affect EURUSD Volatility – May 2017

Monthly Forex News Events that Might Affect EURUSD Volatility – May 2017

The EURUSD technical pattern has become more complex the same way the macro fundamental forces have become more unpredictable. Last month EURUSD continued to exhibit the same ranging pattern that has characterized EUR/USD over the past one and a half year.  The biggest market uncertainty for the month ahead remains the 2nd round of the French election. After the first round, the centrist candidate Emmanuel Macron and far-right leader Marine Le Pen have qualified to the runoff on 7 May.

May is set to be an interesting month with major risk events that can disrupt the EURUSD volatility. Seasonally speaking the US dollar has a strong tendency to strengthen during the first half of the month, but at the same time, we can also note the EURUSD tendency to find a significant swing low at the end of the month. The seasonal pattern only gives us the tendency of a particular currency to exhibit a certain behavior at a certain time, so we have to carefully monitor the pattern and how the fundamental forces interact with the price action.

Going forward, we’re going to analyze and disseminate the major news event for the upcoming month that can be the catalyst for higher EURUSD volatility.

“Don’t risk significant money in front of key reports, since that is gambling not trading.”
– Paul Tudor Jones

Monthly Forex News Events that Might Affect EURUSD Volatility – May 2017

The month of May will bring several risk events that can be the catalyst for the EURUSD to exhibit higher volatility. If the fundamentals align with the current technicals the EUR/USD can be in the process of reversal. However, we need the fundamental to shift and current monetary policy stances to reinforce the higher EURUSD exchange rates.

  • Wednesday, May 3, 2017 – Eurozone GDP figure is the first risk event of the month. After growing 0.4% during the first quarter of 2016, expectations for the first quarter of 2017 are in line with rising business output and consumer sentiment.
  • Wednesday, May 3, 2017 – The Fed interest rate decision will be the highlight of the week. However, since the interest rate decision will not be followed by a press conference we’re confident to speculate that the Fed will keep rates unchanged especially after awful NFP figures.
  • Friday, May 5, 2017 – The Non-Farm Payrolls Report is one of the most awaited figures especially for Forex traders. The unemployment rate unexpectedly continued to drop from 4.7% down to 4.5%, but the US added fewer jobs than expected during the third month of the year. The market consensus sees 175k new jobs added in April which can be a significant rebound after 98k jobs added in March.
  • Sunday, May 7, 2017 – The French presidential election is by far the biggest risk threat to the EUR/USD price stability. For now the markets are pricing in with a probability of 60% that Macron will be the next French president. The official first round results show a tight race with Macron obtaining a slightly lead of 23.75% of the vote while Le Pen coming second with 21.53%.
  • Friday, May 12, 2017 – The German GDP figures for the first quarter are expected to be released. The consensus is that the German economic capacity has reached a top and we should expect moderate growth going forward of only 1.5%.
  • Friday, May 12, 2017 – The US inflation figures have shown that the US economy has lost momentum in the last months casting doubts in the Fed’s ability to pursue further rate hikes. The monthly CPI inflation figures is down to -0.3%, while the annualized rate is down to 2.4%
  • Wednesday, May 24, 2017 – he release of the FOMC Meeting Minutes will reveal further details into Fed’s monetary policy and it can give traders more clues over how many times the Fed will hike rates in 2017.
  • Thursday, May 25, 2017 – The OPEC meeting will be crucial for the markets as both as both OPEC and non-OPEC producers have agreed to extend Oil production cuts. While this news is particularly of importance to the energy sector the spillover effects can disrupt the US dollar volatility as well.
  • Friday, May 26, 2017 – The US GDP figures for the first quarter of 2017 will give us further details into the health of the world’s largest economy. This is of particular importance in gauging interest rate speculations.
  • Friday, May 26-27, 2017 – The 43rd G7 summit will be held in Taormina, Sicily, Italy. This will be Trump’s first visit to Europe as president and certainly if the US President will maintain the same unconventional approach any headlines that will come out of the G7 meeting can impact the market.

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