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Next week’s Forex forecast

Sergiy Zlyvko
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Friday’s trading was successful for European currencies but not such for the U.S. dollar and it is because the U.S. labor market surprised again – until all experts waited a decent job growth, the rate fell short of forecasts, but the unemployment rate dropped sharply to a record 6.7%. As a result, EURUSD to the end of the week came to around 1.3665 and GBPUSD – to 1.6480.

Due to U.S. labor market weak data, EURUSD is poised for growth. The pair opened at 1.3605 on Friday and slipped to a minimum of 1.3570 before the release of the report, but in release reached the maximum at 1.3685, not far from it closed the week.

Eurozone in the coming week is not planning anything interesting, so EURUSD will trade exclusively on U.S. data, we see a lot of: retail sales, inflation, production and consumer confidence survey. If people really cut down their costs as projected (up only by 0.1% in December from 0.7% in November), a pair has great potential for further strengthening to the area of 1.3750. However, we must understand that the duration of such dynamics in doubt – at the next reduction of quantitative easing euro will begin to bear the loss.

GBPUSD this week will have a chance to rehabilitate. Series of disappointing data from the UK greatly undermined the position of the pair and now restore the interest in the British currency can only be a good economic reports exceeded forecasts. If reports on retail sales and inflation will show stable levels, the pair is able to return to the area of 1.6580.

USDJPY suffered heavy losses after disappointing data on the U.S. labor market, however, the fall in demand for a pair may continue, if this week published data only confirms that the consumer sector of the U.S. economy has not yet fully recovered. The immediate goal in this case may be the region of 103.20. Meanwhile, Japan’s economic indicators continue to delight that should stabilize the dynamics of Nikkei index, thus offsetting the negative effect from the reports of the United States.

Current Monday, probably will be quite calm, given the limited number of important economic events. Asian session should be the most active in terms of currency movements: some traders who had failed to respond to the U.S. labor market report on Friday, may adjust their positions in the morning. In addition, China may adjust the dynamics of basic pairs: if reports reaffirm cooling the second largest economy in the world, it again will cause the strength of demand for safe currency.

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