Research Team at BBH, suggests that the initial resistance for the euro is seen in the $1.0880 area.
Key Quotes
“On the downside, the market appears to need something more to encourage it to drive the euro back below the $1.08 area, the floor of the previous trading range. Even a strong employment report (ADP estimate today, national figures Friday) are unlikely to sway participants into expecting a rate hike by the Fed later this month. Comments by NY Fed President Dudley suggest officials are concerned about the decline in inflation expectations and the tightening of financial conditions.
On the other hand, soft economic data, including the return of CPI into deflation territory, boosts speculation of ECB action next week. Many participants feel burnt by the ECB’s mild action in December and are now well aware of Draghi’s limitations. At the same time, speculative positioning is not nearly as extreme as it was then, allowing, perhaps, for less “sell the rumor buy the fact” type of activity.”
(Market News Provided by FXstreet)