The U.S. dollar strengthened against its peers last Friday following a strong U.S. jobs report. The payrolls report came in with 467k jobs versus 125k anticipated in January. Average hourly earnings surged 5.7 percent, fueling speculation about a fifth Federal Reserve rate hike this year.
This week all eyes turn to the U.S. Consumer Price Index scheduled for release on Thursday. Headline inflation is forecast to expand at 7.3 percent y/y, from 7.0 percent in December. A higher reading would likely benefit the greenback.
Technically, we see the EUR/USD trading above 1.14 after the pair hit our profit target at 1.1480. While we might see a steeper correction, euro bulls can hope for further highs as long as the euro remains above 1.1270. A next high is seen at 1.1520, followed by 1.16.
Remaining below 1.36, our short-term forecast is slightly bearish with a next lower target seen at 1.34. Bulls, on the other side, will pay attention to a break above 1.3610 to buy sterling towards 1.37.
DAX – Bears, watch out!
The index approaches once again the 15000-threshold and could slide towards 14800 if 15000 breaks. A break below 14800 could open the door for a steeper decline towards 14400 and 14200. Above 15700 bulls will be in charge.
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