The greenback has been on the retreat since last week as the global economy got embroiled in a new energy crisis. It began with the petrol shortages in Britain before growing into an international geopolitical crisis. These developments stymied the rally of the dollar from beforehand, which was inspired by robust industrial numbers.
Nevertheless, weaker-than-expected employment data for September contributed to the mounting selling pressure in the short term, which created a sizable pullback in the otherwise substantial downtrend on the EURUSD. The question is whether this pullback would be enough to prompt a decisive trend reversal, or upon its completion, the price action would continue to depreciate.
There are plenty of economic releases scheduled for this week that could jolt the market in either direction. The most prominent of which are the U.S. inflation and consumption reports for the previous month. According to the preliminary forecasts, consumer prices are expected to remain unchanged, which would quench investors' fears of soaring inflation, at least for the time being.
This is likely to cushion the greenback's selloff and potentially deter any further gains on the EURUSD. In this case, bears would be able to sell the resulting peak on the expectations for the continuation of the broader downtrend. Conversely, a potentially disappointing CPI report could exacerbate the dollar's woes and drive the EURUSD pullback even higher. This, in turn, would benefit bulls looking to squeeze even more out of the correction.
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