The European Central Bank will take centre stage next week as investors assess whether policymakers are ready to continue easing monetary policy or adopt a more cautious stance amid persistent geopolitical risks.
At the same time, renewed tensions in the Middle East continue to support oil prices after the latest escalation around key energy infrastructure and shipping routes. Higher energy costs could complicate the global inflation outlook, making central banks more cautious about future rate cuts.
Markets widely expect the ECB to leave interest rates unchanged on Thursday. However, investors will closely monitor President Christine Lagarde's press conference for fresh guidance on inflation, growth and the outlook for future policy moves. Any hawkish signals could provide support for the euro, while a more dovish tone may weigh on the single currency.
Our focus this week will be on Alpari's EURUSD and Brent, both of which may be preparing for larger breakout moves as markets react to the ECB decision and developments in the Middle East.
ECB decision and Middle East tensions in focus
Markets will closely monitor the European Central Bank's policy meeting next week while continuing to assess the impact of rising geopolitical tensions in the Middle East on oil prices and inflation. Investors will also watch key UK inflation data and flash PMI surveys for fresh clues on the health of the European economy.
Monday, July 20th: Canada CPI
Canada's inflation report could influence expectations around future Bank of Canada policy decisions and drive volatility in the Canadian dollar.
Wednesday, July 22nd: UK CPI
The latest UK inflation figures may shape expectations around the Bank of England's next policy steps and influence the British pound.
Thursday, July 23rd: ECB Interest Rate Decision and Press Conference
Markets expect the ECB to keep interest rates unchanged. Investors will focus on President Christine Lagarde's comments for signals on the timing of future policy easing and the impact of geopolitical risks on the inflation outlook.
Friday, July 24th: Germany and UK Flash PMIs
The latest business activity surveys will provide an early snapshot of economic momentum across Europe's two largest economies and could drive volatility in the euro and pound.
Friday, July 24th: Japan CPI
Japan's inflation report may offer fresh clues on the Bank of Japan's policy outlook and the pace of further monetary policy normalization.