Last week we saw the EUR/USD continuing its strong bearish rally to reach fresh one year lows at 1.3119 early on Monday morning. The currency pair was pressured lower by the ongoing geopolitical tensions in Eastern Europe. Another major factor behind the EUR/USD's moves lower was the speculation around a possible easing from ECB at its next monetary policy meeting this week on the 4th of September. Since this morning, EUR/USD is slightly pulling back as investors do not expect Mario Draghi to act this week but rather this month.

EUR

Last week we saw the EUR/USD continuing its strong bearish rally to reach fresh one year lows at 1.3119 early on Monday morning. The currency pair was pressured lower by the ongoing geopolitical tensions in Eastern Europe. Another major factor behind the EUR/USD's moves lower was the speculation around a possible easing from ECB at its next monetary policy meeting this week on the 4th of September. Since this morning, EUR/USD is slightly pulling back as investors do not expect Mario Draghi to act this week but rather this month.

According to analysts, Draghi will first wait to see the impact of the new policies announced in June as they are not fully deployed yet. So far, EUR/USD remains above 1.30, it is now trading at a one year low and should hover in a tight range between 1.31 – 1.32 until Thursday. Big names like Goldman Sachs have a strongly bearish view on the pair and have, throughout the course of last week, revised its forecast from 1.30 to 1.20 in the next 12 months.

EUR/CHF traders will also look at the ECB decision closely since the pair is approaching its 1.20 floor, despite Jordan's comments over the weekend. Jordan insisted on the importance of maintaining this floor: “Enforcing the minimum exchange rate of 1.20 per euro is absolutely central to ensure adequate monetary conditions in Switzerland.”

USD

Last week the dollar was really strong once again, the Dollar Index managed to climb to a high of 82.800, levels touched overnight on Monday and remained mostly resilient to end of month profits taking. With the exception of the Norwegian Kroner, the greenback was the best performing currency for the month of August; this is mostly due to the slightly hawkish shift in the tone of the Fed given the visible improvement of the US employment market.

Against the JPY, the dollar remained stuck in a range; USD/JPY hovered between 104.13 and 103.71 until today. The pair exited the range on the upper side and is now ready for a new leg up, we target 104.89 before the end of the week. The Non-Farm Payrolls will probably help to give the last push on Friday, as actual figures are expected to be higher with 225K jobs added for the month of August. Furthermore any appreciation of the greenback could hurt Gold performance in what it supposed to be its best performing month according to seasonality.