Euro Skyrockets on Lagarde’s Remarks, US NFPs Under the Spotlight

ECB PRESIDENT LAGARDE TURNS HAWKISH, BOE HIKES, US JOBS DATA IN FOCUS

The US dollar continued to trade lower against most of the other major currencies on Thursday and during the Asian session Friday. It gained only versus JPY, while it was found virtually unchanged against CHF and CAD. The main gainers were EUR and NZD, with the former nearly doubling the rally of the latter.

EUR/GBP — TECHNICAL OUTLOOK

EUR/GBP traded lower after the BoE decision, but hit support slightly above 0.8280, and following remarks by ECB President Lagarde at the press conference following the decision of her Bank, it skyrocketed to break above the 0.8630 barrier, marked by the high of February 1st, but also above the downside resistance line draw from the high of December 8th. In our view, this has signaled a short-term trend reversal.

USD/JPY — TECHNICAL OUTLOOK

USD/JPY has been in a recovery mode since Wednesday, when it hit support at 114.15. The move confirmed a forthcoming higher low on the daily chart, but it is still far from a higher high. Therefore, we prefer to adopt a flat stance for now. Maybe the US employment report could make the outlook a bit clearer.

AS FOR THE REST OF TODAY’S EVENTS

At the same time with the US employment report, we get jobs data for January from Canada as well. The unemployment rate is forecast to have risen to 6.2% from 5.9%, while the employment change is anticipated to show that the Canadian economy has lost 117.5k jobs after adding 54.7k in December. A weak report could hurt the Canadian dollar, but not much in our view, as last week, the BoC provided strong signals with regards to a rate hike in March, and we don’t believe that these numbers could change that.

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