USD struggles to make a decisive recovery The US Dollar is trying to stage a widespread recovery on Monday as bears decided to take a breath after an aggressive sell-off over the last week. There are no any fundamental drivers behind the local rebound, which rather has to do with technical factors including the oversold conditions.
Thy key events for the greenback this week are the two-day FOMC meeting and Friday’s NFP report. The American currency won’t be able to attract a more sustainable demand unless these two events are bullish. As for the Fed, the meeting will likely be a non-event, as Janet Yellen is leaving the Central bank early February. Therefore, she will unlikely send the markets any strong signals during her last meeting, though her overall tone may have some effect on USD-pairs. If Yellen sticks to a cautious and mostly neutral rhetoric, it won’t add to the USD recovery.
The US Nonfarm Payrolls report is expected to show that employment increased 183K in January, while Average Hourly Earnings are projected to pick up from 2.5% to 2.6% YoY over the same period. If salaries really increase, the market will take it as a background for rise in inflation. But should the numbers disappoint, the sellers will make a sharp come back and may send USD index to fresh three-year lows.
