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EUR/USD consolidates around 1.1400, posts modest weekly losses

  • Euro rises on Friday against the US dollar for the second day in -a-row, still down for the week. 
  • Greenback weakness late on Friday after Fed Chairman Powell’s comments. 

The EUR/USD bounced from 1.1344 during Friday’s US session and rose back above the 1.1400 zone. It peaked at 1.1417 and near the end of the session was hovering around 1.1400. 

The euro bottomed after the release of the US Jobs report that surpased expectations and bosted the greenback. It reveresed the trend when Jerome Powell sound cautions about the economic outlook. His message was seen as dovish and pushed the US dollar to the downside and US yields higher. 

The recovery of EUR/USD lost strength below 1.1420. It is about to end far from the weekly low it reached at 1.1307, but also off the high of 1.1495. The pair continues to move sideways limited by the 20-week moving average and the 1.1500 area while to the downside, the 1.1300 zone continues to be the critical support. 

Week ahead

Recession fears continue to loom in the US, and we expect that to weigh on business confidence indicators released next week. The FOMC minutes and a number of speeches will attract a lot of attention next week, along with further developments in the ongoing government shutdown”, said analyst at Danske Bank. In the Eurozone, ECB minutes will be released, they will look “in particular for discussion on the growth and inflation outlook – not least the comments on the strong wage growth numbers.

Also next week, China/US trade meetings will take place. “Fed tightening worries have moved to the background and with the meeting next week between US and Chinese officials, there might be some progress at last on what has become a dominating source of uncertainty in the second half of 2018. Against his background, the very strong growth in jobs in December has been most welcome: it suggests that, barring shocks, the expansionary phase of the business cycle is not about to end soon”, wrote William De Vijlder,  Group Chief Economist of BNP Paribas. 

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