We have seen choppy moves in the FX Market since the beginning of this week with the majority of currencies pair trading sideways in a wide range.
Looking at the European session economic releases, the Spanish services PMI came out as expected at 54.6 in January, while both the Italian and French figures missed estimates and retreated to 53.6 and 50.3 against forecasts of 54.2 and 50.6 respectively.
In Germany, the Services PMI fell to 55.0 down from 55.4. In the meantime, the Eurozone figures remains unchanged at 53.6 during this month.
Moreover, the Services PMI in the U.K overtook expectations and registered 55.6 against 55.4 estimated and 55.5 last month.
Few minutes later, the Eurozone retail sales missed estimates and slid to 0.3% against 0.4% expected.
During the U.S trading session, ADP non-farm employment change jumped to 205K beyond analysts expectations, which were at 193K only.
Last but not least, Final services PMI in the U.S declined to 53.2 down from 53.7 earlier.
Technically, the Japanese Yen regains half of BoJ slide as Japan yield drops to G-7 record. In addition, we have seen a huge sell-off in the U.S Dollar as investors begun to readjust their positioning in the Greenback after the probability of a rate increase in March dipped to 12.0% only.
The Dollar index succeeded to break below 98.15 daily support, which triggered a big acceleration to the downside towards as low as 96.88 level.
In the other side, the British pound advanced to above 1.4600 mark on the back of strong PMI figures from the U.K and a weaker Dollar in the same time. Cable has reached as high as 1.4645 level before ending the day around 1.4595.
We believe that the upside potential is limited in this pair as the med-term remains bearish but looking at the near-term structure, it is clear that the current trend has turned positive.
Regarding the Euro, the single currency was fighting for a clear direction as market participants were looking for additional catalysts to drive their investment decisions.
In the near-term, the trend has changed to positive from neutral as prices finally managed to exit the range formation sitting between 1.0980 and 1.0800 levels. Consequently, traders should look for an acceleration higher in the coming days and we expect the Euro to reach as high as 1.1240 levels soon, especially if the U.S jobs report comes out with a disappointment on Friday.
Meanwhile, the outlook is bearish in the med-term as far as 1.15 peak is in place.
In sum, and from a swing trading perspective, the single currency should keep trading higher as far as 1.0950 low is in place, while a break below this level will weaken the recent bullish move.
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