EURUSD: in a mixed mood

The major data posted during the previous week for the US market was related to jobs data, released on Friday. The non-farm payrolls in January reached the level of 143K, while the market consensus was standing at 170K. At the same time, the unemployment rate dropped by 0,1 percentage point to the level of 4%, from previous 4,1%. Average hourly earnings were higher by 0,5% for the month, bringing it to the level of 4,1% on a yearly basis. As for other macro data posted for the US during the previous week, the ISM Manufacturing PMI for January was standing at 50,9, a bit higher from market estimate of 49,8. The jobs openings for December show a bit weaker data at 7,6M, in relation to the market expectation of 8M new jobs. The S&P Services PMI for January reached the level of 52,8, which was lower from the market expectation of 54,3. Friday also brought data for Michigan Consumer Sentiment preliminary for February at the level of 67,8, which was lower from estimated 71,1. The Michigan 5 years inflation expectations were also increased by 0,1 percentage point to 3,3%, from previous 3,2%.

Initial inflation estimate for inflation in January in the Euro Zone was 2,5% a bit higher from the market consensus of 2,4%. The core inflation is still elevated at the level of 2,7% y/y, again higher from forecasted 2,6%. The HCOB Composite PMI final for January in Germany was standing at 52,5 while the same indicator for the Euro Zone was at the level of 50,2. Both indicators were in line with market estimates. The retail sales in the Euro Zone in December was higher by 1,9% on a yearly basis, despite its drop of -0,2% for the month. The trade balance in Germany ended the year at the positive territory of 20,7B euro, much higher from estimated 17M euro.

During the previous week the eurusd currency pair was traded in a mixed manner. The Monday trading session started with a strong move from levels around 1,03 all the way down toward 1,05. This was not at all sustainable for the currency pair, so the rest of the week eurusd was traded between 1,044 and 1,031. The reversal toward the down side occurred in the Friday trading session, after the NFP and unemployment data. The currency pair ended the week at the level of 1,032. The RSI is still struggling to hold levels above the 50, but still without success. The indicator was mostly moving around the 45 level. This is an indication that investors are still not quite sure which side to trade. The moving average of 50 days is still diverging from MA200, indicating that there will be no cross of lines in the near period.
Friday's move of the currency pair to the higher grounds for the US Dollar, which occurred after the NFP data were released, is actually pointing that the market is still expecting interest rates to stay higher for a longer period of time. Although the figure of NFP jobs was lower from market expectation, still average hourly earnings showed some increase in the latest period, which might bring inflation to higher grounds, and consequently, impact Fed's decision to hold interest rates at current levels for a longer period of time. Markets will use the week ahead to digest a bit of the latest jobs data, in which sense, some reversal might be possible. Still, without significant data related to inflation, it should not be expected to make any significant move toward the upside. The Resistance line at 1,04 could easily be tested, however, for the higher grounds, there is currently no clear indication on charts. Just in case that the market decides to continue with the downtrend, then the level of 1,02 might be tested.

Important news to watch during the week ahead are:
EUR: Industrial Production in January in the Euro Zone, GDP Growth rate Q/Q second estimate for Q4 for the Euro Zone,
USD: Fed Chair Powell testimony at Tuesday, Inflation rate for January, the Producers Price Index in January, Retail Sales in January, Industrial Production in January