In the last FOMC conference meeting and economic projections, the Feds stated that interest rate hike would be data dependent. The major data’s they intend to focus on is the Labor sector, inflation reports and wage growth. Last week, data from unemployment claims and inflation showed improvement in the economy as investors are still holding grounds rate hike is expected by June or at worst September this year.
In the long term picture, weekly bias in the EUR/USD remains on the downside. However, recovery from 1.0461 extended last week but overall bias is still unchanged. We see the minor rally as a wave correction and we’d expect upside to be limited by 1.1096 resistance and bring down trend resumption. Below 1.0461 will extend recent down trend to next fibonacci level at 1.0283. Nonetheless, decisive break of 1.1096 will indicate near term reversal and bring stronger rebound to 1.1350 psychological zones.
Later in the week, investors will be focusing on the U.S. employment report for February, due out on Friday and Monday’s data on personal spending for further indications on the path of monetary policy. Tuesday’s euro zone inflation report will also be closely watched.