For a central bank that says it doesn’t target the exchange rate the European Central Bank, and its President Mario Draghi in particular, has done a very good job in pushing the euro sharply lower over the course of the last nine months. Just minutes after Mr Draghi had finished his opening comments the euro was pushing up to the highs of the day, after the ECB President upgraded the banks growth forecasts for 2015, and 2016 as well as striking a much more optimistic tone on the European economy at the same time as revising up the inflation forecast for 2016 to 1.5% from 1.3%. This upbeat tone served to cause equity markets to wobble a little initially, until he revealed that the banks bond buying program would include the buying of bonds with negative yields down to -0.2%, the level of the current deposit rate. This had the effect of cutting the rug out from under the rebound in the euro, sending it sharply lower, as well as propelling European equities strongly higher, back towards multi year highs. While European equities continued to find a fair wind US markets continue to struggle under their own weight amidst concerns that the recovery in the US might well be starting to tail off somewhat, after a raft of some rather underwhelming economic data this week. US investors still seem intent on believing that the US Federal Reserve remains on course to raise rates sometime in the next six months after the strong end to 2014 in the US labour market. There remains a nagging problem which it appears a lot of people in the market appear to be ignoring, and it involves falling prices, as well as a reluctance to spend on the part of US consumer, despite the fall in energy prices. When you also add the prospect that job losses are starting to rise again and you have to question whether the Federal Reserve would be wise in pushing rates up, at a time when everyone else is cutting theirs. This fear is probably what prompted Chicago Fed President and FOMC voting member Charles Evans to argue this week that the Fed should wait until early next year before raising rates. Weekly jobless claims have come in above 300k for three of the last four weeks in a sign that job losses in the manufacturing sector could well be starting to bite as US oil producers cut back. This week’s ADP also pointed to fewer jobs being added on a monthly basis, despite positive revisions for 2014. In this context, today’s February employment report is likely to be important in the context of the direction of travel of how many jobs are being added on a month on month basis. Expectations are for 235k new jobs for February, down slightly from the 257k new jobs in January and for the unemployment rate to fall to 5.6%, but it is likely to be the average hourly earnings data that is likely to be front and centre on most people’s radars as it was last month. A sharp jump in the year on year number to 2.2% in January caused a great deal of bullishness, with respect to rising wages, but a large part of the rise was as a result of double digit minimum wage increases filtering through into the numbers from up to 23 US states. Expectations are for the year on year number to slip back to 2.1%, with a month on month rise of 0.2%. The US trade deficit for January is expected to shrink to -$41.2bn from -$46.6bn. EURUSD – yesterday’s move below 1.1000 brings the euro closer towards the 1.0800 level in the short term, after the failure to move beyond the resistance at the 1.1250 area earlier this week. Only a move back through 1.1270 re-targets the 1.1450 area and last week’s high. GBPUSD – this week’s move through the 1.5330 area opens up the potential for a move towards 1.5000, with an interim target at the 1.5120 area, as the key day reversal we identified last week starts to unwind. To stabilise this move lower we need to get back above the 1.5350 area. EURGBP – yesterday’s move down to 0.7220 brings puts in another new low as we continue to push closer to the 0.7000 level. We need to see a move back through the 0.7300 level to undermine the downward momentum otherwise we could well be set for a further decline towards the 0.7000 level. USDJPY – we continue to grind higher but we still need to overcome the 120.60 to suggest a retest of the 121.85 highs from last year. If we can’t sustain a move back through 119.80 we could well head back towards 118.60. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.