EUR/USD declined over the week

Compared to two weeks ago, last it proved to be less volatile. Except Friday the euro was slipping during the previous week and erased lots of the accumulated gains.

In terms of fundamental agenda there was lack of significant news, but however EUR/USD decreased from $1.1230 to $1.1135 and closed  the week 1.11% lower.

On Monday the euro weakened on Mario Draghi’s speech which in fact didn’t bring anything new. The European Central Bank will be ready to ease monetary policy further in March, having in mind the low oil prices, the global slowdown in growth and the risks from financial market volatility. However this event declined the euro with 50 pips it reached daily lows at $ 1.1120 – 1.1130.

Tuesday showed that the ZEW Indicator of Economic Sentiment for Germany dropped sharply to 1.0 in February 2016 from 10.2 in January but still is above expectations of 0. Meanwhile, the current situation dropped to 52.3 points from 59.7 in the previous month. The single currency was not affected by these news but continued with is downward movement.

Main news for Wednesday came with the U.S. housing starts for January, which unexpectedly dropped with 3.8%. The report of the Commerce Department showed a decrease to 1,099K from 1,143K previously. The building permits ticked fell to 1,202K from 1,204K in December, recoding a 0.2% monthly loss. For the housing market this could be a temporary setback, having in mind the bad weather in some parts of the country.

Positive mood was given by the PPI, which advanced 0.1% in January. We are witnessing an increase on a monthly basis to 0.1% in January from -0.2%, with the yearly change accelerating to -0.2% from -1.0% previously.

Furthermore CPI data on Friday showed an increase of  2.2%, which is the strongest pace of growth since June 2012 when CPI index is up 1.4 %. The inflation in USA in January has improved to 0.0%from -0.1% month-on-month, while the yearly change accelerated notably to 1.4% from 0.7% previously. The strengthening of inflationary pressures is largely due to higher costs for rents, 0.3%, and for medical services by 0.5%. With 0.5% more expensive and medicines sold on prescription. Americans paid 0.6% more for clothing and 0.3% - for new cars. Gasoline continues to become cheaper with new 4.8 percent, while food products account zero change.

 Amid the positive data EUR/USD dropped and failed to hold gains. The single currency  is going back above the  $1.11 and this somewhat presupposes possible further upward movement for the pair.