The upcoming week promises to be volatile. First, several significant macroeconomic reports will be released in the U.S. Second, the intrigue surrounding Donald Trump's new tariffs on EU goods is expected to be resolved. This is the final week of the month when the most critical data for the U.S. dollar is published. This suggests that the EUR/USD pair is likely to enter a zone of price turbulence without delay.

Monday

On the surface, Monday's economic calendar appears empty. Only European Central Bank President Christine Lagarde and Bundesbank President Joachim Nagel are scheduled to speak. Moreover, U.S. markets will be closed in observance of Memorial Day.

However, this doesn't mean EUR/USD will remain range-bound. First, traders will react to Jerome Powell's speech on Sunday at 08:40 EST. More importantly, the market will digest Donald Trump's statement recommending a 50% tariff on EU goods starting June 1. This announcement came late Friday during the U.S. session, so it will likely continue to affect EUR/USD on Monday. Over the weekend, Brussels reacted sharply to the U.S. President's controversial statement. EU Trade Commissioner Maros Sefcovic emphasized that EU-U.S. trade is "unmatched" and should be based on "mutual respect, not threats." He also noted that the EU "is ready to defend its interests," hinting that retaliatory measures, prepared as early as April, could be enacted.

In short, despite the sparse calendar and U.S. holiday, elevated volatility is expected at the start of the new trading week.

Tuesday

Tuesday's key reports will be released during the U.S. session. The focus will be on the April durable goods orders. After surging 7.5% in March, a significant decline of 7.9% is expected in April. Excluding transportation, orders are projected to fall by 0.1%.

The Conference Board Consumer Confidence Index will also be published. It has declined for five consecutive months, falling to 86.0 in April, the lowest since May 2020. May's forecast is 87.1, but the dollar could face substantial pressure if it shows another drop (i.e., below 86.0). Earlier, the University of Michigan's Consumer Sentiment Index plunged to 50.8, the lowest since June 2022. A weak Conference Board reading would reinforce the negative narrative for the greenback amid rising inflation expectations and renewed tariff fears.

Wednesday

The FOMC minutes from the May meeting will be released on Wednesday. At that meeting, the Fed left all policy parameters unchanged, with Jerome Powell stating that the Fed needed more clarity on how tariffs would impact the economy. He also downplayed the Q1 GDP slowdown, saying the U.S. economy remains in "good shape." The official statement reflected these themes.

The minutes are anticipated to convey a similar message: an optimistic outlook on current conditions alongside serious concerns about future risks, particularly due to trade tensions. The greater the concern, the more pressure it puts on the dollar. However, the minutes will influence EUR/USD only if they differ significantly from Powell's comments or the official statement.

Also, on Wednesday, the Richmond Fed Manufacturing Index will be released. In April, it dropped sharply to -13. A modest recovery is expected in May to -9, but the index will remain negative. The release will only support the dollar if it unexpectedly returns to positive territory, which is unlikely.

Two Fed officials will speak: Governor Christopher Waller, a voting member, and Minneapolis Fed President Neel Kashkari, who does not vote this year.

Thursday

The second estimate of Q1 U.S. GDP will be published on May 29. The first estimate showed a 0.3% contraction, following 2.4% growth in Q4 2024. Most analysts expect the second estimate to confirm the initial figure. If the data is revised downward, the dollar may come under added pressure, reviving talk of stagflation.

That said, market reaction might be muted since the Q1 GDP decline was primarily due to a 41% surge in imports, as businesses stockpiled ahead of the new tariff schedule. Thus, even if a revision happens, the market reaction may be short-lived. If the data matches expectations, it will likely be ignored.

In addition, the April Pending Home Sales report will be released. This early housing market indicator showed a 6.1% increase in March, but a 1.0% decline is expected in April.

Friday

On the final trading day of the week, the U.S. will release the Core PCE Price Index for April — the Fed's preferred measure of inflation. It slowed to 2.6% YoY in March after jumping to 3.0% in February. April's forecast is a modest rise to 2.8%. This would reinforce the Fed's wait-and-see approach, likely delaying any policy changes through June and July.

On paper, this would be a hawkish development, but not under current conditions, where inflation is rising while economic growth is slowing. The looming threat of stagflation will continue to cast a shadow over the dollar.

Conclusion

The coming week is packed with major macroeconomic events, but all of them will be overshadowed by trade-related developments. If negotiations between the U.S. and China make progress and talks with the EU resume constructively—for example, if Trump backs down on the 50% tariff threat—the dollar could not only recover lost ground but reach new highs. EUR/USD could fall back to the 1.1080–1.1190 range.

However, if the escalation continues — mainly if Trump follows through on the tariff threat and the EU retaliates — we could see EUR/USD rally toward 1.1440 (the upper Bollinger Band on D1). Considering current signals, the escalation scenario looks more likely.