Let’s start with a look at the economic calendar for the upcoming days.
Weekly Forex Outlook: Feb. 5-9
Last week the US dollar index managed to close at the positive territory for the first time since the start of December. USD rallied on Friday on upbeat US jobs data. American wages rose at the fastest pace since 2009. This fueled inflation expectations and made the market price in more rate hikes. As a result, this week the American currency has a chance to get a bit higher or at least to remain supported.
USD/JPY returned from 108.30 up to 110.00. If it manages to overcome resistance at 110.45, it may recover to 200-day MA at 111.70.
The advance of EUR/USD once again stopped at 1.2500. Support lies at 1.2350 and 1.2250. German political parties still didn’t manage to form a coalition. Yet, the region’s economy is strong and there will be few events to disturb the euro. It might be a good idea to buy the euro in crosses like EUR/JPY, EUR/AUD, EUR/NZD and EUR/CAD.
GBP/USD was rejected down from 1.4280. Apart from the strong US figures, the pair was hurt by weak data from Britain’s construction sector. At the same time, traders are afraid to act ahead of the Bank of England’s meeting. There’s a spinning top candle on the weekly chart – a sign of the market’s uncertainty. Governor Mark Carney sounded upbeat recently, and some analysts think that the BoE will raise interest rates in May. If the central bank confirms such expectations, GBP.USD will get to 1.4370/1.44. A disappointment will lead the pair down to 1.3975 and 1.3830.
Apart from the BoE meeting on Thursday, the economic calendar for this week contains the meeting of the Reserve Bank of Australian on Tuesday and the New Zealand’s central bank on Wednesday.
As for NZD/USD, it strengthened since the last RBNZ meeting, although the economic data became worse. The pair looks vulnerable for a decline to 0.7240 and 0.7190.