EUR/USD

Last week was good for the currency market. GBP/USD is close to an important level. 

Will we see a rise in EUR/USD despite the forecasts of most analysts?

I rather have neutral expectations in this currency pair due to the lack of a clear trend.

On Friday it became clear that in December the US economy added 292,000 new jobs. Expectations were that it would be added 203 000. This of course is good news for the dollar because better data generally lead to appreciation of the currency of the country. But instead of the dollar to rise and the currency pair to make lower lows we saw just the opposite. Finally the week ended in favor of the euro. 

On Friday, when the news came out, it became clear that the bears did not have enough strength to hold the price in the low levels around 1.0800. Instead, we saw closing above the middle Bollinger.

When a news does not lead to the expected effect and instead we see on the chart opposite movement, that gives us an early indication of change of direction.

So for me it was more likely to see a rise this week.

But today the greenback is stronger against the euro, prolonging its two-day leap as investors assessed the risk-off mood oscillation amid the latest moves of the People's Bank of China along with speeches of several central bankers.

Therefore, the EUR/USD pair declined over one hundred pips from the two-week high at $1.0969 reached during the European market hours on January 11, as the buck received technical aid from the resistance at $1.10, which was only temporarily breached once since the beginning of November.

In the afternoon, the EUR/USD fell 0.20% to trade at $1.0836, sliding from its intraday high at $1.0900, while the buck slightly advanced against major peers with the US dollar index rising 0.28% to99.18 points.

Light data session

Traders experienced a relatively calm morning in Europe, as the major release came from the UK, thus influencing mainly the cable. Nevertheless, the sluggish manufacturing and industrial updates cast additional clouds in London and raised questions about the timing of a rate hike by the Bank of England (BoE). 

Later today, the Bureau of Labor Statistics published the monthly update of JOLTS job openings, which hit 5.43 million in December, marginally missing the market survey of 5.45 million, but still rising from the 5.38 million seen in November.

Looking ahead, traders will keep an eye on the upcoming Chinese trade balance figures for December later on Tuesday, as the surplus is expected to shrink to $51.3 billion, after $54.1 billion booked a month ago.

The schedule in the US will start to attract more attention in the second half of the week, starting with initial jobless claims due on Thursday and the highlight will come on Friday when the US Census Bureau is set to post a muted retail sales report for December, expected to show a 0.1% drop month-to-month.

As for upcoming European news, industrial production for the whole euro block is forecast to hit only 1.3% year-to-year in November, slowing from the pace of 1.9% booked previously. The release is scheduled for Wednesday morning,while the German Federal Statistical Office will unveil the GDP annual growth rate on Thursday, with the anticipation of a 1.7% hike.