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It’s a busy week ahead for the major currencies, but traders are might focus on a couple of central bank events and top-tier U.S. data.

But before that, ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!

And now for the potential market movers this week:

Major Economic Events:

Flash PMI readings (May 24, starting 7:15 am GMT) – It’s the third week of the month, so y’all know what that means… It’s time for another batch of flash PMIs!

The euro zone will get the ball rolling, with France and Germany gearing up to print their manufacturing and services PMIs. Small dips are eyed across all sectors, but the figures are still expected to reflect industry growth.

The U.K. will be up next, possibly reporting a drop from 55.8 to 54.9 for its manufacturing PMI and a decline from 58.9 to 56.9 for its services PMI.

Lastly, the U.S. is expected to also report a slower pace of expansion in both sectors, with the manufacturing PMI slated to fall from 59.2 to 57.9 and the services PMI to dip from 55.6 to 55.4.

RBNZ monetary policy statement (May 25, 2:00 am GMT) – New Zealand’s central bank will be making its rate decision this week and would likely announce an aggressive 0.50% hike for its benchmark rate.

Now the RBNZ has been one of the more hawkish central banks, steadily increasing rates by 0.25% at a time since October last year, before pulling a 0.50% hike in April.

This time, policymakers are likely to keep the pedal to the metal when it comes to tightening in order to ward off stubborn inflationary pressures.

A smaller than expected hike, however, might mean some downside for the Kiwi.

FOMC meeting minutes (May 25, 6:00 pm GMT) – The Federal Reserve recently stepped up their tightening game by announcing a 0.50% hike in their latest decision.

The transcript of their meeting should provide more insight on their latest moves and whether or not they’re likely to stage a repeat performance in their next decision.

Canadian retail sales (May 26, 12:30 pm GMT) – The Great White North will be printing its latest consumer spending figures for April, with analysts expecting a slowdown from 2.1% to 2.0% for the core figure. Meanwhile, headline retail sales likely advanced from 0.1% to 1.4%.

U.S. core PCE price index (May 27, 12:30 pm GMT) – The Fed’s preferred inflation measure will be printed before the week comes to a close, and this should also provide some clues on the central bank’s next moves.

Another 0.3% uptick is eyed for April, and a stronger than expected read might be enough to convince dollar bulls that an even larger rate hike is looming.

Forex Setup of the Week: NZD/CHF

Week Ahead in FX (May 23 – 27): Spotlight on RBNZ Decision & FOMC Minutes

NZD/CHF 4-hour Forex Chart

This pair continues to cruise lower inside a descending channel that’s been holding since last month. Another test of the channel resistance seems to be brewing.

Using the handy Fib tool shows that the 61.8% level is right smack in line with the resistance near the .6300 handle. This also coincides with the 100 SMA dynamic inflection point, which adds to its strength as a ceiling.

Moving averages suggest that the downtrend is more likely to gain traction than to reverse, as the 100 SMA is below the slower-moving 200 SMA.

However, Stochastic is pulling higher, so price might follow suit while bullish pressure is in play. Sellers might wait for the oscillator to reach the overbought area and turn lower before hopping in.

Once that happens, NZD/CHF could slump back to the swing low at the .6175 area or the channel support closer to .6150.

This might all depend on the RBNZ decision mid-week, though, as a very hawkish announcement might spark a reversal. Then again, a less upbeat announcement focusing on the risks of a global recession could allow the downtrend to resume.