The Eurozone PMI Composite for January was released at the level of 58.8 points in January and the PMI Services came out in at the level of 58.8 points. This strong optimism reflects the strong economic performance that the Eurozone is experiencing, which continues to be broad-based and still expected to continue within next months. Backlogs of work are increasing, job creation is historically very strong and new orders continue to pour in. This situation suggests even better growth outlook in the months ahead with a side note of increasing price pressures. Nevertheless, the Retail Sales data disappointed the market participants as they were released at the level of -1.1%, which was still as anticipated, but much lower than last month figure of 2.0%. This might be important data, as the overall holiday sales period performed rather weak.
Even though markets are currently rattled by higher inflation expectations, the global investors expect Eurozone inflation to remain subdued throughout the year given the continued weak wage growth, the effects of the stronger euro on import prices and the lagged effect of survey indicators on selling prices on inflation.
Let's now take a look at the EUR/JPY technical picture at the H4 time frame. The market had made a top at the level of 117.50 and currently is reversing towards the nearest technical support at the level of 136.60.The market conditions are overbought and the momentum indicator starts to turn down.
