At the time of writing, the euro had already managed four consecutive daily gains while seen against the US dollar. Price action for the EUR/USD has pushed the currency pair +1.35% higher, just short of 1.37 levels in this first part of February. Looking deeper into what helped the bullish move we see that the euro got two noteworthy thrusts from some major events throughout the course of last week.

ECB no change: no news good news for the euro

From the Eurozone itself we saw that region’s central bank, the ECB, left interest rates unchanged and announced no changes to its current monetary policy. Well as they say “no news is good news” apparently, because the market chose to interpret the ECB’s decision to stay on hold and not indulge in further stimulus, as supportive for the single currency. Even if in the end the ECB’s dovish mode still prevailed.

US payrolls improve but fall short of expectations

The second noteworthy leg up for the EUR/USD came on Friday, when the world’s largest economy, the United States, announced its latest figures for Nonfarm payrolls. It emerged that the US created 113k new jobs for the month of January, rising from the previous disappointing reading of 74k. Even the unemployment rate ticked slightly lower to 6.6% easing off the previous 6.7%.

So far all looked rosier for the USD, so why did the euro find support at the expense of the USD? Expectations, as market players very well know play a very important part here. Consensus expectations were for the creation of another 180k and in the end while the actual +113k improved on the previous reading it fell short of these expected levels quite significantly. If the economic data is not robust enough to warrant a steady pace of tapering then it is understandable that this turns up into USD selling.

EUR/USD has so far traded in the range of 1.3618 – 1.3683. For the current week we are expecting initial resistance at 1.3696, if breeched expect more upside. Beyond the 1.3696 next resistance is expected at 1.3753. To the downside we envisage support to cap price moves lower at 1.3530/1.3420.

The USD was softer across most of its major counterparts in fact, but found support against the Japanese yen. Despite hitting weekly lows of 100.75 the currency pair managed to recover highs of 102.58 throughout last week.

USD/JPY has traded in the range of 101.99 – 102.67 for the former part of this week. In the current week we were expecting the currency pair to test 104.06, after which a sell off could retrace price action towards 101.16/100.04 area. __

Yellen makes her first public appearance as Fed Chairman

Early into the current week Janet Yellen was scheduled for her first public appearance as Fed Chairman, as she was expected to testify in front of the House Financial Services Committee on Tuesday.

In her initial remarks released ahead of the testimony to Congress she expressed optimism going forward and said that the FOMC is likely to continue QE taper in measured steps. She however also added that the labour market recovery was “far from complete”. For those investors wondering what the Fed would do now that the jobless rate was approaching 6.5%, Yellen made it clear that short term interest (at zero) would continue well past this level.

A Bullish 2014 so far for the Yellow Metal...

Gold has continued to defy gravity throughout these first weeks in 2014. While the most plausible outcome for the price of the yellow metal, seemed for it to head lower (due to the Fed’s recent monetary project - tapering). It looks like price was far more resilient than one would expect.

The price of Gold has earned itself around 6% since its first trade in 2014, rising from $1203.23/ounce to the $1280.10/ounce, at the time of writing. Improved overall economic outlook and with the start of the end of the ultra-loose monetary policy from the FED, Gold was expected to continue in its longer term descent. This however has not materialised yet and it seems that the precious metal has bought itself some time, as in the background concerns over emerging market growth and upcoming debt ceiling issues have overshadowed the effects of tapering.

In the former part of the current week Gold has traded in the range of $1265.27 - $1288.52. For the current week we are expecting the initial up-move to correct lower. To the upside next resistance level is at $1294.32. To the downside key levels to watch for support are $1247.17/$1227.29.