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Euro targets rebound to 1.1440

Major currencies closed the week higher. The dollar fell 1.16% against the Japanese yen, 0.73% against the Canadian dollar, 0.63% against the British pound, 0.48% against the euro, 0.48% against the franc, 0.42% against the Australian dollar, and 0.40% against the New Zealand dollar.

The euro slipped 0.40% to 1.1409 by the end of trading on Friday, January 14. The single currency opened the day to the upside. Profit-taking on long positions started broke out during the European session. There was no news flow behind the decline. Selling most likely intensified at the end of the week ahead of the long weekend, as well as rising 10-year UST yields. US macro data had a neutral impact on the market.

US industrial output in December declined 0.1% MoM compared to the the median forecast of +0.3% and the prior reading of +0.7% (upwardly revised from +0.5%). Manufacturing output decreased 0.3% MoM vs. +0.3% projected.

Retail sales in December dropped 1.9% MoM against the forecast of -0.1% and +0.2% in November (revised down from +0.3%). In YoY terms, retail sales climbed 17.0%, down from the previous figure of 18.24%.

Today’s macro agenda (GMT+3)

  • US: the Martin Luther King Jr. Day holiday

Current outlook

The US dollar opened Monday trading slightly higher.  By the time of writing, major currencies were showing mixed performances. EURUSD recovered to 1.1420. The gains are underpinned by a rise in euro crosspairs.

Given that the FX market ended Friday with losses, today we expect to see the dollar weaken amid holiday-thinned trading within a correction to 1.1440 (LB of the 55-day SMA).

Monday is a public holiday stateside. The fixed income market is closed. EURUSD gains are capped by a decline in S&P 500 index futures.

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