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Koefoed: What NFP and Q2 GDP will do for EURUSD

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We’ve seen strong results from some of America’s biggest companies over the last few days, just as we are about to get a clearer picture of the US economy.
This week, we’ll get the latest estimate of quarterly US GDP growth, the monthly US jobs report and the Federal Open Market Committee (FOMC) meets this week to mull over monetary policy.
Mads Koefoed, Head of Macro Strategy at Saxo Bank, believes that the Q2 US GDP is likely to show an increase of three percent. More or less erasing the 2.9 percent we saw in Q1 which was blamed on the extreme winter weather. Regarding the FOMC meeting, Mads Koefoed is expecting another reduction of ten billion in the QE3 purchase amount. According to Mads Koefoed the biggest event this week is the Non Farm Payroll (NFP) on Friday. June figures showed a jump in private payrolls of 288,000 and he expects another solid number; between 220 000 and 230 000 extra jobs.
The NFP figures have a big influence on central banks, but also European CPI is due out this week, which will reveal how much more the ECB has to do to combat the threat of deflation in the Eurozone. However, the outlook for the short-term is that disinflation will continue well into H2.
Mads Koefoed believe investors should keep an eye on EURUSD, which could go lower from the current level due to fundamental backing of the dollar against the Euro with strong data particularly from the US Non Farm Payroll figures. The technical picture shows that the Eurodollar broke through the 1.35 level recently, and it could go lower, to 1.32 and 132.50 according to Mads Koefoed.