FX Daily: One test down, four to go

FX Daily: Several forecasts to come

The Federal Reserve's recent decision to forego any interest rate hikes in 2023 was put to the test on Friday, with the U.S. payroll report showing a decline of 200,000 jobs. This marked the first of five major events leading up to the September FOMC meeting that could sway market expectations. The second test is expected on Wednesday, when the U.S. CPI report is released, with a forecast of 0.1% month-over-month and 0.2% core inflation, both in line with expectations.

Despite this dip, there is still room for further dollar depreciation if the Fed's dovish stance is confirmed.

Meanwhile, the euro faces a relatively quiet week, with no major domestic economic indicators to influence its trajectory. The focus remains on the USD side of the pair, with a softer CPI reading potentially propelling USD/EUR above 1.160. However, the 200-day moving average at 1.1630 serves as a significant resistance level. Short-term rate differentials continue to drive EUR/USD, making the Fed story a key determinant of the pair's movement.

In Romania, Moody's maintained the country's Baa3 rating with a negative outlook, while the National Bank of Romania is expected to keep interest rates unchanged at 6.50%. The next significant release is Romanian headline inflation, expected to ease from 10.4% to 7.6% year-over-year. Polish GDP is also expected to show marginal growth in Q2, while the rest of Central and Eastern Europe awaits key economic data releases, with the Czech and Polish economies showing mixed growth patterns.