Fundamental view:

The US dollar struggled to recover against its rival Euro, however it partially succeeded in earisng some of its losses of previous week.. Post ECB’s announcement favored the Euro this week. Inflation and the Central bank’s reaction towards it, are the major catalysts in the market now. Stronger than expected CPI data favored the US dollar. The US Bureau of Economic Analysis reported on Thursday that annual inflation, as measured by the Consumer Price Index (CPI) had made a jump to its highest level since 4 decades at 7.5% in January. which is high than the market expectation of 7.2%. The immediate reaction to the headline was Market rushing to price in a 50 bps rate hike from the US Federal Reserve as soon as March. Thus dollar got some attention from the traders which helped it to recover to some extent.

In this week, ECB President Lagarde Speech on 7^th February, EIA Crude Oil Stocks Change on 9^th February and US CPI monthly report and yearly report on 10^th February favored bearish trend whereas Eurozone Retail Sales monthly report on 8^th February and US Michigan Consumer Sentiment on 11^th 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 at Feb 14, Eurozone Employment Change quarterly report, Eurozone GDP quarterly report, NY Fed Empire State Manufacturing Index at Feb 15, ECB Non-monetary Policy Meeting, US Retail Sales monthly report, EIA Crude Oil Stocks Change, FOMC Minutes at Feb 16, Initial Jobless Claims and US Philadelphia Fed Manufacturing Index at Feb 17.

EUR/USD Weekly outlook:

Technical View:

Last week’s high was 0.10% higher than the previous week. Maintaining high at 1.1495 and low at 1.1329 showed a movement of 166 pips.

In the upcoming week we expect EUR/USD to show a bearish trend. The currency pair is trading below the 50 Simple Moving Average and the MACD trades to the downside. Should 1.1285 proves to be unreliable support then the pair may fall further to 1.1224 and 1.1119 respectively whereas a solid breakout above 1.1451 will open a clear path upward to 1.1556 and then will further raise up to 1.1617. Chart formation of a M-pattern in H4 chart sets prospects for a bearish trend. Dark cloud pattern formation in H4 chart escalates the expectation for a bearish trend.