Weekly Market Forecast for February 9th-13th

US Dollar Performance: The US Dollar experienced a strong week due to unwinding of shorts and positive data, but weakened after a disappointing Job Openings report, with upcoming NFP data expected to significantly influence its direction.

Federal Reserve Outlook: Market expectations suggest a potential 54 basis points of easing from the Fed this year, with a strong NFP report likely leading to a hawkish shift and a weaker report reinforcing dovish bets.

Eurozone Central Bank Update: The ECB maintained interest rates, with President Lagarde commenting on the euro's strength and its potential impact on inflation, while policymakers showed less concern as the euro eased from the 1.20 level.

EUR/USD Technical Analysis: The EUR/USD pair has shown resistance around the 1.19 level, with traders eyeing potential drops to 1.1760 or breaks higher for new cycle highs, while upcoming economic data could further influence market movements.

Japanese Yen and Elections: Following Japan's lower house elections, Prime Minister Sanae Takaichi secured a supermajority, strengthening the yen as she aims to tackle cost-of-living issues and enhance national security.

U.S. Economic Data Releases: Key U.S. economic indicators, including retail sales and labor market data, are set to be released this week after delays due to a government shutdown, with expectations of moderate growth and potential easing of inflation pressures.

U.K. GDP Projections: The U.K. is expected to report modest GDP growth figures, with a dovish tone from the Bank of England suggesting possible rate cuts if the data underperforms, amid slowing inflation trends.

Inflation Trends in the U.S.: U.S. inflation is projected to show a decline in headline figures, driven by slower food and fuel price increases, while core inflation may firm due to various economic factors, indicating mixed pressures on consumer prices.

US Dollar Outlook: Barclays warns that the US dollar is facing increasing downside risks due to a rising risk premium, despite the US economy's strong performance compared to global peers.

Currency Comparisons: The Japanese yen is expected to have more potential for appreciation than the euro, which is already trading at high levels, limiting its upside potential.

Asian Currencies: Several Asian currencies may benefit from ongoing dollar depreciation as global investors diversify their portfolios away from the US, potentially increasing inflows into emerging market assets in Asia.

Monetary Policy Impact: The Federal Reserve's interest rate decisions are crucial for the dollar's direction, with current market expectations reflecting two rate cuts this year, which could significantly influence investor sentiment and positioning.

USD Outlook: The US Dollar is rebounding due to strong economic data, with upcoming reports like the US ADP and ISM Services PMI potentially influencing interest rate expectations and further supporting the greenback.

GBP Performance: The British Pound received a boost from better-than-expected UK Flash PMIs, while the Bank of England is expected to maintain the current Bank Rate with a focus on data-driven guidance.

GBPUSD Technical Analysis: The GBPUSD pair has seen a false breakout above 1.3790, with sellers targeting the major trendline around 1.3500, while buyers are expected to support the trendline for potential rallies.

Upcoming Economic Events: Key economic data releases include the US ADP and ISM Services PMI today, the BoE rate decision and US Jobless Claims tomorrow, and the University of Michigan Consumer Sentiment data on Friday.

USD/JPY Movement: The USD/JPY currency pair has risen over 100 pips to 156.70, recovering from a drop following speculated 'rate checks' by Japanese authorities, who previously intervened to prevent the pair from exceeding 159.00.

Market Sentiment: The Japanese yen continues to face selling pressure, with a shift towards a more bullish near-term bias for USD/JPY as it breaks above key moving averages, indicating a potential for further upward movement.

Intervention Speculation: There is ongoing speculation about when Japan will intervene in the currency market, especially after previous 'rate checks' have led to actual interventions, with officials possibly waiting for the snap election on February 8 to gauge market reactions.

Impact of Trading Levels: As traders push USD/JPY above the 155.00 mark, it may prompt Japanese officials to consider intervention, reflecting their growing impatience with the currency's performance.

USD Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, with improving labor market data and strong ISM Manufacturing PMI suggesting potential for further gains if upcoming data remains positive.

JPY Outlook: The Bank of Japan maintained interest rates and slightly upgraded growth and inflation forecasts, with expectations for a potential rate hike in April depending on economic data, while the Japanese Yen faces pressure from a strengthening US Dollar.

USD/JPY Technical Analysis: The USD/JPY pair has broken above the 154.50 resistance, with potential to reach 159.00 if support holds; however, a rising wedge pattern on the 1-hour chart indicates possible loss of momentum and a correction.

Upcoming Economic Data: Key upcoming economic indicators include the US ADP, ISM Services PMI, Jobless Claims, and University of Michigan Consumer Sentiment, alongside Japan's lower house election expected to favor the LDP party.