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Friday, January 5th
The EUR/USD pair came under bearish presser and lost some pips in early Europe after brief consolidation phase on the back of attempts of the US dollar to recover its positions across the market. Recent dollar’s recovery could be mainly explained by upbeat data from the US labor market, released on Thursday. Adding to this, markets are expecting further downside correction of the major currency pair in wake of profit-taking actions after its recent bullish rally and re-opening buy orders on the US dollar after New Year holidays. On the data front, today we have a pretty busy session, as the economic calendar contains several important releases, such as flash EU inflation numbers and crucial US jobs report, which will set up pair’s further direction this Friday.
The GBP/USD pair failed to keep its positive traction in early Europe, having lost the most part of its intraday gains. Latest pair’s leg down could be explained by attempts of the US dollar to recover positions against its main competitors, as investors are still digesting yesterday’s positive indicators from the US labor market. However, the pound remains better bid on the last working day of this week on the back of increased risk appetite, which dominates the market lately. Moreover, seems that the pound is still benefiting from the upbeat UK services PMI report, which was released a day before. Looking ahead, today all traders’ eyes will remain glued the key US jobs data, which will help the US dollar to form its further trend.
The AUD/USD pair have finally lost its bullish momentum after 12-day winning streak. In Asia, the pair once again refreshed its highs at 0.7869, which were last seen in mid-October. The latest bullish rally of the pair is mainly attributed to broad weakness of the US dollar, which was dominating the market for the last couple of weeks. Adding to this, upbeat risk-on sentiments, boosted by yesterday’s Chinese Caixin Services PMI, also provide some support to the higher-yielding Aussie. However, seems that the AUD/USD pair lost its positive traction earlier today on the back of renewed optimism around the US dollar. Adding to this, disappointing Australia’s trade balance numbers also added some bearish pressure on the pair, thus forcing it to change its direction. Today all traders’ attention will remain focused on the key event of this Friday – release of NFP, which is scheduled on the NA session and will help the pair to determine its further direction.
The USD/JPY pair extends yesterday’s rebound, while breaking through the level of 113.00 in the European morning on the back of several bullish factors. One of the main driving factors for the pair remains increased demand for risky assets, which exerts negative pressure on the safe-haven yen. Adding to this, renewed optimism around the greenback, caused by yesterday’s US ADP jobs data, also contributes to latest pair’s bullish rally. On the other hand, ongoing geopolitical drama between the US and N.Korea and upcoming crucial NFP data may easy demand for risky assets somewhat. Besides the US payrolls release, investors will also draw their attention to the data from the US non-manufacturing sector, which will also be released during the NA trading session.
Major events of the day:
EU Prelim. CPI – 12.00 (GMT +2)
US Nonfarm Payrolls – 15.30 (GMT +2)
US Unemployment Rate – 15.30 (GMT +2)
Canada Employment Change – 15.30 (GMT +2)
US ISM Non-Manufacturing PMI – 17.00 (GMT +2)
Canada Ivey PMI – 17.00 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1969 R. 1.2137
USDJPY S. 112.27 R. 113.09
GBPUSD S. 1.3484 R. 1.3592
USDCHF S. 0.9712 R. 0.9798
AUDUSD S. 0.7796 R. 0.7900
NZDUSD S. 0.7039 R. 0.7221
USDCAD S. 1.2436 R. 1.2580
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