© Dukascopy Bank SA
EUR/USD was one of the best performing currency pairs throughout the previous trading week ended February 5. The 19-nation currency reached its highest level since late October against the Greenback, while rallying more than 300 points in five days. The period was closed at the level of 1.1156, up from lower 1.08's on the first day of the month. Even though market participants were somewhat undecided on the matter, by giving a 50/50 chance for both gains and losses, there were substantial fundamental drivers in favour of the Euro and against the Dollar. Economists continue speculating about the probability of four interest rate hikes by the Federal Reserve in 2016. While Goldman Sachs experts argue that the Fed will raise the Fed funds target rate by at least 75 bps this year, others are increasingly skeptical about such a possibility. In the meantime, the Euro continued to act as a safe-haven, by joining the Swiss Franc and Japanese Yen in being quite attractive for investment in times of global economic uncertainty.
The odds are growing in favour of the EUR/USD pair's continuous advance this week. Now almost three out of four Community members see the cross higher by Friday, while the mean projection breaches the round level of 1.12. Adding to that, more than 72% of all estimates are falling into the range between 1.10 and 1.1450, meaning there is a high probability of uplifted volatility and wide-range trading. This period is awaited to bring much fewer events than last week. Fed Chair Janet Yellen will testify before both houses of the US Congress on Wednesday and Thursday. Markets are willing to know, whether the March hike is going to be rule out completely, or Ms. Yellen will leave it as an open issue.
© Dukascopy Bank SA