The U.S. Dollar remained in the center of attention on Friday as the week’s most anticipated economic release; the U.S. Retail Sales came in during the afternoon session. The report showed unexpected weakness in consumption, and the PPI also came in worse than expected, leading to a sharp initial sell-off in the Dollar. The Japanese Yen performed the best among the majors and it remains near multi-year highs compared to most of its peers.

Oil had the other most important move on Friday, as the rally that started earlier on the week continued with another very strong day for the commodity. WTI Crude is now back above the $45 level, after trading as low as $39 just a few sessions ago.  The New Zealand Dollar and the Australian Dollar both lost ground despite the favorable trends, as the currencies remained under pressure following the recent rate cut by the RBNZ.

EUR/USD (current price: 1.1160)

The most traded pair remained stuck between 1.11 and 1.1225, as the 200-day MA is catching up to the rate despite the still relatively god U.S. economic numbers. The Eurozone GDP growth number is still way below the U.S. reading that also surprised on the downside just two weeks ago, adding to the fears regarding the value of the common currency. The cross still looks more bullish technically as the rate holds above the 200-day MA, and it’s just below the 1.12 level, possibly waiting for a clear break-out.

Our assessment: EUR/USD still looks undecided, as it trades in a long-standing, broad neutral trading range since last March, after a historic decline to the 1.05 low.

EUR/GBP (current price: 0.8630)

The pair continued to drift higher last week, as we expected, after breaking-out of the bullish flag consolidation pattern that developed following the Brexit panic. The Pound remains the weakest major currency as economic numbers continue to disappoint, while the broader European numbers are still mixed despite the negative interest rates utilized by the ECB. The cross is trading at a fresh 3-year high after hitting a 0.8625 on Friday, above the prior maximum.

Our assessment: The long-term uptrend seems to be intact as the Pound still suffers, possibly pointing to further upside in the coming weeks.

USD/JPY (current price: 101.35)

The Japanese GDP growth number came In exactly at 0%, showing stagnation in the country, compared to the expected growth of 0.2%. The most important safe haven currency remains strong in the face of the global risk rally, as some traders have turned away from the Yen following the Bank of Japan’s change of opinion towards further monetary stimulus just two weeks ago. Further downside is possible this week for the cross, especially if stock markets start a correction in the coming days.

Our assessment: USD/JPY might soon dip below the all-important 100 level, as the dollar might remain under pressure throughout the week.

WTI Crude Oil (current price: $45.51)

The most traded commodity is higher this morning again, as the relative strength of the last week seems to continue in early trading, despite the reported production growth in the U.S. The major currencies are now more influenced by economic news than commodity prices, as investor remain focused on central banks and their future interest rate policies. The current rally in oil might come to an end around the current levels, as the commodity is right at some important long-term resistance lines.

Our assessment: Oil was up by 3% on Friday and today’s session is also influenced by last week’s trend as fundamentals remain weak.

Economic Releases

Most European markets will be closed for the day, and that might mean a less eventful early session, following the strong moves during Friday’s session. Traders will likely turn to the U.S. Empire State Manufacturing Index for clues regarding the country’s economy in the near future, as trade relations remain strong between the emerging countries and the U.S., despite the negative effects of the strong Dollar. The Swiss PPI will also be revised today, as will the U.S. Housing Price Index.