Event risk for the forex market lies primarily on the US dollar side, as consumer confidence, durable goods orders, and GDP revisions are all scheduled to be released. We’ve already seen the greenback start the week on a strong note, but will the currency continue to rack up gains?

What to Watch This Week

Canadian Retail Sales and US Consumer Confidence – March 25
On Tuesday, the release of Canadian retail sales and US consumer confidence could serve as the perfect mix to weigh on the USD/CAD pair in the short-term. First, the Canadian retail data – scheduled to be released at 08:30 EDT – is anticipated to rebound 1.4 percent in January, but given the sharp rise in wholesales sales, tight labor market conditions, and strong Ivey PMI reports over the past two months, retail sales could actually show that Canadian consumers are more resilient than ever. Meanwhile, the Conference Board’s US consumer confidence index – scheduled to be released at 10:00 EDT – is likely to reflect a very different sort of sentiment. The index reading for the month of February at 75 already represents the lowest level in nearly five years, as the combination of high gasoline prices, deteriorating employment conditions, restrictive credit conditions, and a collapsing equity market prove to be a lethal mix for sentiment in the US.

German IFO Survey – March 26
Sentiment amongst Germany’s investors is likely to turn more pessimistic in March, according to the IFO survey. The figure is scheduled to be released at 05:00 EDT, and this release tends to be a significant market-mover for the EUR/USD pair on a very short-term basis. Given the instability in the financial markets over the survey period along with signs that the European Central Bank will not even consider cutting rates, the IFO reading is likely to fall in line with – if not more than – expectations.

US Durable Goods Orders – March 26
Can Boeing help the US durable goods orders figure to rebound? Unlikely, but airline orders may help to prop the headline reading up somewhat. For the month of February, Boeing reported 125 airplane orders, up from a meager 65 in January. While the headline will have the most impact on forex trading, the markets should keep an eye on non-defense capital goods orders excluding aircraft, as this number serves as a leading indicator for business investment. The reading dropped 1.4 percent in January, and continued declines will not bode will for US GDP in the first quarter, especially as consumer spending wanes.

US GDP Revisions – March 27
US GDP is expected to be confirmed at a tepid 0.6 percent pace in the fourth quarter. However, if this number deviates from forecasts by any means, the impact on the US dollar will be fast and furious. Given the extent of dour sentiment on the US economy, a surprisingly strong figure could propel a rally in the greenback. On the other hand, a disappointing number – or worse, a negative figure – will only exacerbate US recession fears and would weigh on the US dollar significantly.

The Stock Market Saga Continues
JP Morgan Chase has agreed to up the price it will pay for Bear Stearns to $10 a share from an ultra-low $2 a share. The news has helped US stock markets to surge, but the impact could be limited. As we witnessed last week, the DJIA was on a rollercoaster last week as similar news only provided short-term gains. The DJIA is currently trading near 12,550 and may continue to move higher to target resistance at the 12,800 level. Forex traders should be aware of this price action as well, since major movements in the stock markets tend to impact carry trades like USD/JPY and GBP/JPY.

Kathy Lien is the Chief Currency Strategist at FXCM.