Time is ripe to sell EUR/USD
Review of the past week
Since the last week was the first week of the month, it was traditionally eventful. According to its results, EUR/USD pair consolidated for 1.1% as ECB governor was positive in his comments and labor market report in the USA was weak. Mario Drahgi continues to surprise market with his optimism. On Thursday 6, while speaking in the ECB meeting, he stated that deflation does not threat Europe now and there is no sense to apply measures to cope with it now. Investors were encouraged by this statement and EUR/USD went above 36.
On the last trading day of the week, release on the US labor market was published. January growth of Non-Farm payrolls was 113 000, which is rather below the figure of consensus-forecast. For the second month in a row, US employers are at an easy pace when it comes to hiring. This is an alarm bell for the US economy and served a background for growth of the European currency. Week's trades were closed at the point of 1.3634. In the fight of bulls and bears on GBP/USD pair there is no winner. Over the past week, Markit Economics research center had been releasing PMI for manufacture and construction as well as for the service sector. Amongst all, only construction report was a good surprise for investors wherease two other were below expectations. This negative background encouraged bears who forced quotations down to 1.6251.
Bulls also paid back in their own coin and got out the most of the weak US Non-Farm payrolls report by raising quotations above 64. Nevertheless, in the end of the week GBP/USD lost its symbolical 0.1% and finished at 1.6407.
Japanese Yen followed its upsurge in January and early February by retreat. Only the first trading day of the week was marked by its consolidation against its US rival as sales on leading global stock exchanges was going on. On Wednesday 5, the report on change in salary for December was published. The figure was above consensus-forecast which supported demand in Japanese currency in the first half of a day. Salary growth will provoke increase of expenses in the future and thus enhancement of inflation. On this background, USD/JPY dropped down to 100.77, but bears were not strong enough to get more. Then bulls joined the game who were not discouraged by weak report on the US Non-Farm payrolls in January. Having added 0.3% for the weak, trades were closed at the point of 102.35.
Forecast for the week February 10 – 14