Yesterday’s Trading:

In mid-December the euro bulls didn’t manage to strengthen above 1.10. Now they are in jubilation on part of New York Fed chief Dudley who helped them pass the important technical levels and pop the stops off the sellers’ short positions.

All Dudley had to say was that a strong dollar is the Fed’s, the economy’s and US companies’ main problem and then the speculators began selling US dollar.

At first the 1.0950 resistance was passed, then the main trend line which took its beginnings from the 1.1712 maximum and passed through 1.1045.

The dollar cheapened, despite strong private sector employment data from the US. The data came out better than expected with employment creation in January at 205k (forecasted: 200k, previous: 267k). The previous value was reassessed up from 257k. The official report is out on Friday.

US service PMI from Markit and ISM came out less than expected and in doing so pushed the dollar down further. Now market participants are placing their bets on only one or two interest rate rises this year, instead of the four that they previously expected. The euro/dollar rose to 1.1145 and, according to recent quotes, is trading around 1.1084.

Main news of the day (EET):

Market Expectations:

In the first half of Thursday trader attention will be on the Bank of England minutes and the ECB economic bulletin. In the evening there will be data on unemployment benefit applications. On Friday will be the Non-Farm Payrolls. Taking into account that the euro has been in the oversell zone and way off the channel for a few hours, today I think we’ll see a correction of the pair to the balance line at 1.1050/45. It is the NFP that makes me think that we will see a rebound today.