European Central Bank decision failed to fulfill its target to depress the Euro. What will it means for major pairs movement this week?

European Central Bank decision failed to fulfill its target to depress the Euro. Contrarily, EURUSD once again tried to breach 1.3670 point, followed by largely flat movement. On the other hand, US unemployment pressures and unconvincing Japan economy weakened USD and JPY against Euro. What will it means for major pairs movement this week?

euro

Neutralized Euro, Weakened Yen

According to Forexmagnates, ECB event last week have brought forex trading volume to unrivaled high, its highest in 2014. Consequently, the European Central Bank looser monetary policies is hoped to bring about a much more active market this month. We should note that the market thrive on speculation. After the Fed Tapering Drama ends in a good note, the market needs another story to go on, and the ECB could fulfill this role. The thing is, the end result of the opening act is different than what was hoped to happen.

ECB rate cut and forward guidance revisions on inflation target and Euro exchange rate have pushed European bonds on a mini rally to a new high level. In the capital market, activities picked up so it reached a new high too. In the forex market, people are also left confused on how could a loose monetary policy led to currency appreciation.

During this week trades, Euro is predicted to survive in largely neutral flow, with EURUSD moves around 1.3600. Meanwhile, EURJPY is still in the bullish direction, but it should be careful of Eurozone Industrial Production data in Thursday and Bank of Japan's interest rate announcement in the day after.

 

USD On Conditional Bullish, Pound At Risk

The latest US NFP on Friday kept market interested by largely slight slips. May NFP showed an improvement of 217,000 jobs, compared to 282,000 on April, and the estimated drop of 215,000. Despite of the slips, analysts saw signs that could mean bigger improvement in the next months. Danske Bank predicted that US job market will grow 250,000-300,000 along with stronger US economy.

Nevertheless, pressures on 10 Year US Treasury Bond yields survived. It shows market players' lack of trust in the US economic recovery. Bond yields have creeped up to 2.6% last week, but it is doubtful if it will continue to go up or turn back down. In the following week, USD probably will be bullish, but the uneasy condition attached shall lead to incidental and short term trades instead of long-term ones. Events that might excite the US Dollar is Jobless Claims data, and some others.

Hopes for a BoE rate hike keeps the GBPUSD alive, but if we check on price movements in D1 timeframe, there is an emergence of a bearish trend. On the other hand, forecast placed the upcoming Claimant Count Change in -25k, slightly changed from -25.1k. Beside of that, a drop in unemployment is expected from 6.8% to 6.7%. Varying signal means that there is a significant risk ahead of the GBPUSD, particularly in Wednesday's unemployment report.

AUDUSD is in poor condition as the result of inconsistent internal and external economic stats. A speech from RBA Governor Glenn Stevens, several releases from China and Australia's unemployment will give some spice to this week's AUDUSD trading. Meanwhile, expectation of a rate hike from Reserve Bank of New Zealand (RBNZ) takes care of NZDUSD bulls. If RBNZ hiked its rate again, NZDUSD could test 0.8700 levels, although it is most probably will go back down afterward.