The Euro was able to appreciate against the Dollar last week and extend its gain yesterday. The current data heavyweight, the US labor market report, is due for publication on Friday. The duel is far from decided, according to economists at Commerzbank.
The Dollar remains in control this week
Many market participants will still be apprehensive following the Dollar’s strong upside move four weeks ago after the surprisingly upbeat NFP for January. As a result, they will probably be cautious about taking a too strong position against the USD over the week.
Suppose it becomes evident that the labor market is not showing any signs of weakening despite the massive rate hikes in the past. In that case, the market will rely more heavily on further Fed rate hikes and interest rates remaining at these levels for longer. That would be positive for USD.
Next week’s focus is likely to be back on the Euro, as the ECB meeting too might provide some surprises after the inflation data in the Eurozone surprised on the upside. After that, it is back to the USD as the FOMC meeting will be held the following week. That means the battle between EUR and USD is far from decided.