EUR/USD Remains Weak as US Data, Non-Farm Payrolls Loom Large
EUR/USD Price, News and Analysis:
The latest Eurozone inflation numbers beat expectations today with the increase put down to changes in German VAT and higher energy prices. These changes are seen by the market as temporary and inflation is unlikely to move towards the ECB’s target anytime soon. The Euro barely moved against the US dollar after the numbers were released.
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The US dollar continues to nudge higher, after breaking through technical resistance, and may now slow any further advance ahead of Friday’s US Labor report (Non-Farm Payrolls). The consensus is for 50k new jobs to have been created in January, compared to a loss of 140k jobs in December, and any marked difference, or revision to last month’s data, will guide the US dollar in the short-term.
The US dollar basket (DXY) broke out of an inverted head and shoulders pattern that started in early December and broke and opened above the 20- and 50-day simple moving averages at the end of last week, providing another positive push for the greenback
US Dollar Basket (DXY) Daily Price Chart (June 2020 – February 3, 2021)
EUR/USD continues to fade lower and a clear break below the 1.2000 area may see the 1.1920 area tested in short-order. The pair are already producing a series of lower highs and lower lows and with the macro backdrop still weak due to ongoing lockdowns and a slow coronavirus vaccination program, further lows may be expected in EUR/USD unless US NFPs disappoint.
EUR/USD Daily Price Chart (June 2020 – February 3, 2021)
IG Retail trader data44.29% of traders are net-long with the ratio of traders short to long at 1.26 to 1.We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise.Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/USD trading bias.
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