Daily market report
As we come to the end of the first trading week of the year, all eyes will be on the US jobs report later today.
On Wednesday, the ADP employment change came out above expectations at 235K up from 182K only in November which sent the US Dollar strongly higher against its peers.
As of today, traders are looking for a decline in the average hourly earnings from 0.6% down to 0.4%, while the unemployment rate in the US is expected to remain unchanged at 3.7%.
However, the focus will be on the Non-Farm payrolls figures which are expected to fall from 263K down to 200K only in December.
In the meantime, a positive surprise cannot be ruled out, especially after the recent positive numbers we have seen in the private sector.
From Canada, the employment change is likely to fall slightly from 10.1K down to 8.0K while the unemployment rate is due to rise by 0.1%, from 5.1% to 5.2%.
Now, let’s have a look at the latest price action developments in the major currency pairs alongside gold.
The Euro began to show some signs of weakness after sellers succeeded to push prices below the hourly support of 1.0575.
Technically, after breaking below the support mentioned above, the currency pair attempted to recover, however, it failed near the 61.8% Fibonacci retracement at 1.0635 and a new selloff started. Therefore, if prices continue to trade below the 1.0635 high in the coming hours, the pair is likely to extend its decline toward the next support which stands at the 1.0445 level.
As of now, a change in trend has occurred in the near term and any bounce is likely to face strong selling pressure.
Finally, the nearest resistance zone is located between 1.0565-1.0575 levels, however, only a daily close above the 1.0635 peak can weaken the current negative outlook.
The British pound saw an increase in volatility this week with sellers defending successfully the 1.2100 psychological barrier.
We have witnessed a strong offer at the 1.2085 level throughout this week, and sellers managed to regain control of this pair, which sent the prices in the direction of an important support located at the 1.1900 mark.
For the time being, the trend remains bearish in the short term, however, the current levels can provide temporary support to prices, and a bounce toward 1.1970-1.1985 levels cannot be ruled out before seeing another decline in this pair.
Moreover, prices continue to form a series of lower highs and lower lows, which keeps the bearish momentum in place.
On the opposite, if the decline resumes below 1.1900 support, we might see a strong drop in the direction of the next support located at the 1.1830 level.
USDJPY started the week on the negative side and managed to reach a strong weekly support located at 129.50 before bouncing strongly and reversing previous losses.
Ahead of today’s US trading session, which is expected to be volatile, we can see that the pair is approaching a key resistance level that stands at 134.55, therefore, the current advance should meet strong sellers and a slowdown in the recent bullish momentum is likely to ease.
From a technical standpoint, if the pair start to reverse lower, prices are expected to retest the 133.00 support before seeing new buyers again.
On the flip side, a daily close above the 134.55 resistance level is likely to signal a larger correction to the upside in the coming days.
The currency pair dipped briefly below 1.3500 psychological support before bouncing strongly and stabilizing above it again.
Therefore, we can see that USDCAD has reintegrated its short-term range located between the 1.3500 and 1.3700 levels. This 200-pip range can see increased volatility in the coming days; therefore, traders should wait until we see a clear break outside of this zone.
In the near term, if prices remain below the 1.3600 resistance, there are higher chances to see the pair heading south again in the direction of the lower side of the current range at the 1.3500-1.3485 zone.
Conversely, a confirmed break above 1.3615 resistance can open the way for more advance in the direction of the 1.3700 mark.
Gold traded in line with our expectations as buyers managed to push prices above the 1825 hourly resistance.
The yellow metal extended its advance and reached the final target mentioned in our monthly report at $1857. Therefore, we might see a price stabilization as new sellers are likely to defend the 1860-1865 resistance zone.
From a technical perspective, gold is following a bullish trend formed with a series of higher highs and higher lows, which reinforces the positive outlook. However, prices should continue to trade above the 1825 support level to confirm the current trend as highlighted in the chart below.
Finally, a break above the 1865 resistance, should lead to a continuation higher toward the 1873-1878 resistance zone in the coming days, while a break below the 1825 support should trigger another wave of weakness in the direction of the 1809 support level.