The Euro remains strong with a bullish bias after ECB’s Mario Draghi comments that the bank will not interfere with the exchange rates. Even though in his press conference he used a dovish tone, he did not succeed in calming down the Euro from rallying.
In the EUR/USD exchange rate, we saw a minor pull back from 1.2500 highs back to 1.2424 on Friday’s closing bell. This was mainly due to dollar’s strength after president Trump’s speech in Davos.
As for the week ahead, we have a heavy economic calendar to follow and the faith in the dollar will depend on this. Starting from Monday, core personal consumption is expected to shift from 1.5% to 1.6%. On Wednesday, FOMC meeting is unlikely to shift rates but the policy will give guidance to trader for the future of dollar. Thursday the ISM manufacturing PMI is expected to remain the same, a better than expected result (59) will help dollar to become stronger. Friday the nonfarm payroll will be released, a 175K is expected to be added, this is a much better number than the previous month of 148K. In order to push the dollar higher we must see a reading of more than 200K. A worst result of 148K will push dollar into big losses.
Technical speaking now and combined with all the above fundamentals we keep our point of view bullish for EUR/USD. Any dip near 1.2363 is a buy opportunity. Caution must be always be in consideration and this is because the recent rally of euro is uncertain, a correction may be in place. A break below 1.2363 can push the rate to the next support 1.2300 and extend to the upper side of the old uptrend channel of 1.2255.