The US dollar stabilized against key currencies after surprise data by ADP Institute. The report showed that the private sector lost more than 300k jobs in January after it added 776k jobs in the previous month. Economists were expecting the figure to rise by 207k. Focus now shifts to the latest initial jobless claims numbers scheduled for later today and the official non-farm payrolls (NFP) that will come out on Friday. Historically, there is usually some divergence between the numbers published by ADP and those released by the Bureau of Labor Statistics.
The British pound held steady during the American and Asian sessions as investors turned their attention to the upcoming interest rate decision by the Bank of England (BOE). The decision comes at a time when the UK has published strong economic numbers. For example, its home price index jumped sharply in January this year. Similarly, inflation has risen while activity in the retail sector has been robust. Therefore, analysts expect that the BOE will increase the interest rate for the second meeting in a row.
The euro also held steady against the US dollar and Swiss franc ahead of the European Central Bank (ECB) decision. The decision also comes at a time when the Eurozone economy is also seeing impressive growth. On Monday, data by Eurostat revealed that the bloc’s economy expanded sharply in the fourth quarter even as the Omicron variant continued spreading. The strong GDP data was followed by data that revealed that the unemployment rate declined to an all-time low. On Wednesday, Eurostat also showed that the bloc’s inflation is rising. Therefore, there is a likelihood that the ECB will sound hawkish today.
EURUSD
The EURUSD pair has been in a strong bullish trend in the past few days. The pair rose to a high of 1.1328 as traders waited for the upcoming ECB decision. On the four-hour chart, the pair is along the 50% Fibonacci retracement level. It also remains above the 25-day moving average and is inside the Ichimoku cloud. Therefore, the pair will likely pull back slightly ahead of the ECB decision.
GBPUSD
The GBPUSD pair continued its bullish trend ahead of the BOE decision. On the six-hour chart, the pair managed to move above the 38.2% Fibonacci retracement level. It is also between the middle and the support lines of Andrew’s pitchfork tool. It is also above the 25-day moving average. Therefore, there is a possibility that the pair will have a pullback as traders sell the rate hike news.
XTIUSD
The XTIUSD pair held steady of the latest OPEC+ deal. The cartel decided to continue with the gradual pace of supply increases. It also moved above the key resistance level at 85, which was the highest point last year. It is between the middle and upper lines of the Bollinger Bands while oscillators have risen. Therefore, the path of the least resistance for the pair is in the upside.
