Price action in EUR/USD remained dominated by USD movements

EUR/USD

Price action in EUR/USD remained dominated by USD movements, with the pair reaching August 2012 lows on Sunday night as the pair tripped sell stops at the 1.2500. The 1.2500 handle was a magnet for the pair throughout the week as large options expiries at that level helped to fend off some of the USD strength. On Thursday the ECB rate decision/press conference saw the EUR weaken sharply as the pair moved back below 1.2500 as the initial statement and Q&A was more dovish than expected, with the Governing Council has been tasked staff with preparing further measures if needed. As a result, the pair fell over 100 pips and reached a session low at 1.2396. However the pair was provided following the NFP report which revealed a miss on the headline figure and average hourly earnings. Looking ahead, next week will likely be a continuation of the post-ECB fallout with a host of ECB speakers and Eurozone CPI/GDP being the main points of attention.

AUD/USD

AUD came under heavy selling pressure at the start of the week, while printing 4yr low following the ABS revising its Sep. unemployment rate to 6.2% from 6.1%, amid mixed AU Retail Sales and Trade Balance data. Short covering, however, helped the pair bounce back after the RBA left rates unchanged as expected, maintained its neutral stance and dropped the "AUD remains high by historical standards" phrase. Later in the week, the pair saw whipsaw price action following the release of a mixed Australian employment report, which showed a net gain of 24.1k vs. Exp. 20.0k jobs, while the unemployment rate remained at 6.2%, the highest since September 2002. As Europe came to the market on Thursday the USD weakened and the pair moved back above the 0.8600 handle but failed to fully regain its earlier losses, heading into the last European close of the week trading either side of the 0.8600 level. Looking ahead Chinese trade balance over the weekend and CPI on Monday are likely to impact price action, with a lack of major Australian data and US data on the light side, although the US retail sales and import price index at the end of the week will draw participant attention.

USD/JPY

The pair started the week near its highest level in 7 years, as the USD continued to strengthen following the surprise stimulus decision by the BoJ, with the pair then breaking through 112.00, 113.00 and 114.00 as the pair took out seven handles in seven days. Following Thursday’s ECB press conference USD/JPY continued its move higher, breaking back above the 115.00 handle. Thereafter. the US monthly jobs report revealed a miss for the headline (214K vs. Exp. 235K), with wage growth also falling short of expectations, which subsequently saw the USD trim some of its weekly gains as USD?JPY slipped back below 115.00. Looking ahead the after effects of this week’s price action, also in particular the central bank policy divergence, may dictate price action for the week. For Japanese data the industrial production number, as well as the US univ. of Michigan confidence, will lso provide some trading opportunities.