The U.S. dollar received a boost from Friday’s Non-Farm Payrolls report which came in above expectations. The biggest question among traders is now, whether the dollar’s recovery will be sustained or whether the recent downward move in both EUR/USD and GBP/USD could turn out to be a bear-trap. As usual, we will turn our focus to the technical picture in order to evaluate profitable trading opportunities and potential shifts in the market’s bullish bias. For more details see our technical analysis below.
This week’s biggest event will be the Bank of England’s Super Thursday, as this will be the BoE’s first rate decision with a press conference since the central bank hiked rates at November’s Super Thursday. While no one expects a change in interest rates this time, the focus will be on the wording of the statement and BoE Governor Carney’s tone in the press conference. The other main event is the release of the BoE's Quarterly Inflation Report at the same time as the meeting.
Apart from the BoE’s Super Thursday there is little economic data on the calendar this week.
The U.K. Service Sector PMI, due for release today at 9:30 UTC could have a minor impact on the pound’s price action ahead of the BoE meeting Thursday.
Furthermore, the ISM Non-Manufacturing Index is scheduled for release today at 15:00 UTC but with payrolls already released, this report is not expected to have a significant impact on the dollar.
From the Eurozone, ECB President Mario Draghi presents annual report to the European Parliament today at 16:00 UTC.
GBP/USD
While the cable’s uptrend is still intact bullish momentum came to a halt after the pound failed to close above 1.43. We now see a potential double-top pattern that could point to further bearish momentum, provided that the pair falls below 1.3980.
EUR/USD
The euro remained confined to a sideways trading range between 1.2530 and 1.2330. While the current uptrend channel is still unbroken, we will pay attention to the euro’s sideways range, focusing on breakouts above 1.2540 or below 1.2330.
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