Fundamental view:
The Euro had largest weekly gain since March 2020 and reached fresh 2022 high of 1.1483. The Major currency pair was following the uptrend since the starting of the week due to broad US dollar weakness and soared after the ECB meeting. US Central bank policymakers diluted expectations of a hefty 50 basis points hike in March even with inflation at a 40-year high with their recent speech, which weighed on the US dollar. On the other hand, European Central Bank President Christine Lagarde with her hawkish tone surprised market players, following the release of a mildly dovish statement. She expressed logical concerns on mounting price pressures, and said that “compared with our expectations in December, risks to the inflation outlook are tilted to the upside, particularly in the near term,” She also refrained from saying that a rate hike this year would be unlikely. Traders are expecting a possible rate hike by the end of 2022.
However, The US dollar came back on Friday with upbeat NFP data, US managed to add 467K new job positions, which is very high than the expectation of -192k. Meanwhile the Unemployment Rate ticked higher to 4%, while the Participation Rate jumped to 62.2%, signaling quite a healthy recovery in the sector. Overall, The Euro had a good week.
In this week, Eurozone GDP quarterly report on 31st January and US Nonfarm Payrolls on 4th February favored bearish trend whereas ISM Manufacturing PMI on 1st February, US ADP Nonfarm Employment Change, Eurozone CPI monthly report on 2nd February and ECB Interest Rate Decision on 3rd February favored bullish trend for the pair.
The major economic events deciding the movement of the pair in the next week are ECB President Lagarde Speech, Eurozone Industrial Production yearly report at Feb 07, ECB Supervisory Board Member Fernandez-Bollo Speech at Feb 08, US EIA Crude Oil Stocks Change, US WASDE Report at Feb 09, Initial Jobless Claims, Federal Budget Balance at Feb 10 and Michigan Consumer Sentiment at Feb 11.
EUR/USD Weekly outlook: