The first month of the new year has brought EURUSD to a new multi-year low which was quickly bought and since then EURUSD exchange rate has been positive. The lackluster December NFP report of only 156k new job added, coupled with extreme dollar bullish bets which acted as a contrarian catalyst has fueled the EURUSD recovery. On the other side of the FX spectrum, the ECB president Mario Draghi has softened his dovish tone which has helped the EURUSD recovery. On the other hand, the Fed Chairwoman Janet Yellen has warned that a delay in the tightening cycle can hamper economic growth. It seems the Fed, at least for the time being, is still on track to gradually hike rates which is the reason why current EURUSD rally can be in jeopardy. Going forward, we’re going to analyze and disseminate the major news event in the upcoming month that can be the catalyst for higher EURUSD volatility. “Don’t risk significant money in front of key reports, since that is gambling not trading.” Paul Tudor Jones

February 2017 EURUSD Potential Risk Events

February 2017 seems a quiet month in terms of major risk events and other than the usual economic and Central Bank announcements there is nothing much to worried about. However, we need to pay closer attention to the Trump’s economic plans now that he is sworn in as the 45^th US president. Each of his words will be measured on a different scale as those words, now can easily be turned into real action that can affect the economy and potentially strengthened the US Dollar.

• Wednesday, February 1, 2017 – The first day of the new month will bring the FOMC statement and the Fed’s interest rate decision. There are no real expectations that the Fed will raise rates during the first half of the year especially under a Trump presidency that vows massive infrastructure investments. However, for the time being, we can expect the same hawkish rhetoric from the Fed which can boost the greenback even if they keep the monetary policy unchanged.
• Friday, February 3, 2017 - Usually, the first week of each month brings the Non-Farm Payrolls Report one of the most awaited figures especially for Forex traders. The market consensus is for a flat reading of 4.7% Unemployment rate. After modest 156k new jobs added during the last month of 2016, the market consensus is for 165k jobs added during the first month of the new year which can still be enough to push up the greenback.
• Friday, February 3, 2017 – The Malt informal EU summit which will gather the EU heads of states is a major risk event as major topics like the immigration crisis, Brexit, and the EU economic problems will be on the top of the list.
• Tuesday, February 14, 2017 – The German Preliminary GDP figures is a big risk event for the EURUSD exchange rate. The German GDP grew strongly to an impressive 1.9%, the strongest rate in five years. Having a weaker euro currency has definitely helped Europe’s engine of growth which relies heavily on exports.
• Wednesday, February 15, 2017 – The US CPI inflation figures is another big risk event because inflation is part of the Fed assessment on deciding whether to hike rates or not. The US CPI inflation rose 0.3% in December while the annualized rate grows to 2.1%. With the pickup in the energy sector coupled with the broad based dollar strength, we can expect to see inflation during the first month of 2017 on the same levels we saw at the end of last year.
• Wednesday, February 15, 2017 – The US Retail sales posted another strong month in December due to the holiday season. After a 0.6% growth in retail sales, we can expect a much slower January, as usually the first month of the year has a strong seasonal pattern that suggest a slowdown in retail sales.
• Wednesday, February 22, 2017 – The FOMC Meeting Minutes which gives more insights from the previous Fed rate decision is a good opportunity for traders to learn more about the Fed’s monetary policy outlook. This details of the FOMC Meeting Minutes can drive the dollar sentiment and as we have seen from previous reports the rate hike forecast are at best an educated guess. It’s hard to believe that the Fed will deliver 3 rates hikes in 2017 and as soon as the investors will realize this reality we’ll see dollar long positions being liquidated.
• Tuesday, February 28, 2017 – The US GDP figures is the first opportunity for investors to see how the economy has performed during the first month of the new year. The US economy grows at a slower pace in the last quarter of 2016 but Trump’s economic plans and infrastructure spending can boost growth which means that the risk remains to the downside.