Last week the attempt to push the dollar lower failed miserably, as I said in my previous articles, every dip on the dollar is a new opportunity to come back in position for bulls. From a technical stance, the dollar index (DXY) is currently developing a bullish flag pattern; any confirmed breakout to the upside would provide enough strength to the greenback to bring it to 100.00 key level under short notice.

USD

Last week an attempt to push the dollar lower failed miserably; as I said in my previous articles, every dip on the dollar is a new opportunity to come back in position for bulls. From a technical stance, the dollar index (DXY) is currently developing a bullish flag pattern; any confirmed breakout to the upside would provide enough strength to the greenback to bring it to 100.00 key level in a heart beat.

From a fundamental point of view, the drivers remain the same; the prospective of rate hike by mid-2015 reinforced by the monetary policy divergence with other major central banks (ECB and BoJ for example). Major economic data are used as hints to assess the probability of this estimated calendar. Last week, the NFP proved it again with the upbeat reading resulting in a strong spike for the Greenback. With an addition of 257K jobs in the American economy for the month of January versus an expected 228K, we have seen strong volatility spikes on dollars quoted pairs. The strongest moves we would like to point out were seen on USD/JPY and on Gold respectively from a low of 117.11 to a high of 119.198 hours and from 1264$ to a low of 1228.17 all than in the span of only 8 hours.

EUR

The EUR/USD struggled to find a direction last week and its pullback attempt failed when the pair got smashed following the publication of the NFP numbers on Friday. That was not the only bearish factor in force on the single currency. In fact the Greek debt discussions between the new Greek government and the Troika were watched closely by market participants. So far the negotiations are not heading in the right direction however the market looks rather resilient which could suggest that it is prepared for an eventual Grexit in case of negotiation failure. So far the ECB stands firm on its position and even tried to show its determination by not allowing anymore sub-investment grade Greek government bonds and the state guaranteed bonds to be used as collateral.

The current nervousness is clearly visible on the price action of the pair, on the 3rd February, it gained 200 pips to abandon its gains the next day, then pared back 190 pips on the 5th. Let’s see if the price action will be similar this week and especially if the 1.1270 support holds.