The end of last week saw the Non Farm Payroll figures for January, which showed a bigger than expected rise in unemployment and triggered a sharp sell off in crude oil on renewed worries over the state of the US economy, and a weakening of the US dollar against the euro. In later trading, hopes of an imminent decision in the Congress regarding the stimulus package sparked a strong rally in the equities markets which in turn saw a reversal in the price of oil, and a fall in the euro dollar pair. So all in all, not a very clear picture for us today, either from a technical or fundamental perspective.

Today, there is very little in the way of economic data, to provide any clues for our trading, with no news due out in the US, and the only news in the Eurozone being the German Trade balance figures which have already been released. These came in at 10.7B against a forecast of 10B and represent the difference in value between imported and exported goods during the month. In this case the actual has exceed the forecast and as expected this has had a positive effect on the home currency, in this case the Euro. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation’s exports, which in turn also has an impact on production and prices for domestic manufacturers, with a positive number indicating that more goods were exported than imported.

It is extremely difficult trading the euro to dollar at the moment, as we wait for confirming signals to give us some direction for our trades. Friday’s numbers did little to help, but merely confirmed that we are in a strong sideways move. Later this week we have some more significant data being released along with statements from Fed Charmain Bernanke, Trade Balance figures, Retail Sales and Unemployment figures, so let’s hope this provides some impetus to the pair.