EURUSD: a higher for longer
The major data posted during the previous week were related to the US jobs data. The surprisingly better than expected Non-farm Payrolls figures of 256K hit the market on Friday. The expectations were standing at the side of 200K. At the same time, the unemployment rate dropped to the level of 4,1%, from 4,2% posted during previous months. Average hourly earnings were increased by 0,3% in December, bringing the figure to 3,9% for the year. Another surprise came from the Michigan Consumer Sentiment preliminary for January. The Michigan 5 years inflation expectations were increased to the level of 3,3%, from 3% posted during the previous months. From other macro data posted during the week, the ISM Services PMI in December reached 54,1 a bit higher from 53,3 market consensus.
Inflation rate preliminary for December in Germany reached 2,6% on a yearly basis, which was higher from market consensus of 2,4%. Inflation rate on a monthly basis was standing at 0,4%. Inflation rate in the Euro Zone flash for December was standing at 2,4% y/y and was in line with market expectations. The unemployment rate in the EuroZone in November was 6,3%, unchanged from the previous month. Factory orders in Germany continue to be under pressure with -5,4% m/m change in November. This was strongly below forecasted 0,3%. Retail sales in Germany in November were also surprising with a drop of -0,6% m/m while the market again expected to see a positive figure of 0,5%. The balance of trade in Germany in November managed to stay in a positive territory with 19,7B euros, which was much higher from market consensus of 14,8B euros.
During the previous week, the strong strengthening of the US Dollar continued. The eurusd took the course further toward the downside, reaching the lowest weekly level at 1,0220. The historical support line at 1,04 has been easily breached. This represents a continuation of the move toward the parity, after the last defense line at 1,04 has been clearly broken. The euro Zone continues to struggle to sustain its modest economic growth, while the latest jobs data in the US showed clear resilience of the US economy toward the inflation and high interest rates. The RSI continues to move around the oversold market side for the last three weeks. There is no clear indication on the potential for a short reversal. The MA50 continues to diverge from MA200, without an indication that the convergence might start anytime soon.
The markets set the clear course for eurusd in September last year. Now the main question is with which speed the markets will head toward parity? Current charts are pointing to some probability that the level 1,02 could be tested in the week ahead. However, it should be taken into account that December Inflation data for the US will be posted in the week ahead, which might bring back some volatility. The move toward the upside is possible, but it should be taken with a precaution. After posted jobs data, the market is currently in the sentiment that the interest rates will be “higher for longer”, in which sense, a demand for US Dollar might continue.
Important news to watch during the week ahead are:
EUR: Full year GDP growth in Germany, Inflation rate in Germany, final for December,
USD: Producers Price Index for December, Inflation rate in December, Retail Sales in December, Building Permits preliminary for December, Housing starts in December
Inflation rate preliminary for December in Germany reached 2,6% on a yearly basis, which was higher from market consensus of 2,4%. Inflation rate on a monthly basis was standing at 0,4%. Inflation rate in the Euro Zone flash for December was standing at 2,4% y/y and was in line with market expectations. The unemployment rate in the EuroZone in November was 6,3%, unchanged from the previous month. Factory orders in Germany continue to be under pressure with -5,4% m/m change in November. This was strongly below forecasted 0,3%. Retail sales in Germany in November were also surprising with a drop of -0,6% m/m while the market again expected to see a positive figure of 0,5%. The balance of trade in Germany in November managed to stay in a positive territory with 19,7B euros, which was much higher from market consensus of 14,8B euros.
During the previous week, the strong strengthening of the US Dollar continued. The eurusd took the course further toward the downside, reaching the lowest weekly level at 1,0220. The historical support line at 1,04 has been easily breached. This represents a continuation of the move toward the parity, after the last defense line at 1,04 has been clearly broken. The euro Zone continues to struggle to sustain its modest economic growth, while the latest jobs data in the US showed clear resilience of the US economy toward the inflation and high interest rates. The RSI continues to move around the oversold market side for the last three weeks. There is no clear indication on the potential for a short reversal. The MA50 continues to diverge from MA200, without an indication that the convergence might start anytime soon.
The markets set the clear course for eurusd in September last year. Now the main question is with which speed the markets will head toward parity? Current charts are pointing to some probability that the level 1,02 could be tested in the week ahead. However, it should be taken into account that December Inflation data for the US will be posted in the week ahead, which might bring back some volatility. The move toward the upside is possible, but it should be taken with a precaution. After posted jobs data, the market is currently in the sentiment that the interest rates will be “higher for longer”, in which sense, a demand for US Dollar might continue.
Important news to watch during the week ahead are:
EUR: Full year GDP growth in Germany, Inflation rate in Germany, final for December,
USD: Producers Price Index for December, Inflation rate in December, Retail Sales in December, Building Permits preliminary for December, Housing starts in December
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.