Eurozone inflation leap caused by temporary steps.
EUR/USD fighting 1.2000 for now.
The most recent Eurozone inflation amounts beat expectations today with the increase set down to changes in German VAT and higher energy rates. These changes are seen from the market as temporary and inflation is not likely to proceed towards the ECB's target anytime soon. The Euro hardly moved against the US dollar following the numbers were published.
The US dollar continues to nudge higher, after breaking through specialized resistance, and may now impede any additional progress ahead of Friday's US Labor report (Non-Farm Payrolls). The consensus is for 50k new jobs to have been produced in January, compared to a reduction of 140k projects in December, and any noticeable difference, or revision to the month's statistics, will guide the US dollar in the short term.
The US dollar basket (DXY) broke out of an inverted head and shoulders pattern that started in early December and broke and opened above the 20- and also 50-day simple moving averages at the end of last week, supplying another positive push for the greenback
US DOLLAR BASKET (DXY) DAILY PRICE CHART (JUNE 2020 -- FEBRUARY 3, 2021)
EUR/USD proceeds to fade lower and a very clear break under the 1.2000 area can see the 1.1920 area analyzed in short-order. The set are already generating a series of lower highs and lower lows and with the macro backdrop still weak due to continuing lockdowns and also a slow coronavirus vaccination program, further afield might be expected in EUR/USD unless US NFPs disappoint.
EUR/USD DAILY PRICE CHART (JUNE 2020 -- FEBRUARY 3, 2021)
IG Retail trader data44.29% of traders are net-long using the ratio of traders brief to long at 1.26 to 1. We typically have a contrarian view to audience sentiment, and also the fact traders are net-short suggests EUR/USD prices will continue to rise.Positioning is more net-short than yesterday but not as net-short from last week. The blend of present sentiment and recent changes gives us an additional mixed EUR/USD trading bias.