Last week traders focused on the US NFP Employment Change numbers that showed that the US market lost 140k jobs during the month of December versus an expected of +71K. However, the adjustment to the November print was +336K, an increase of 91K jobs. Because of the adjustment, the NET NFP measure for December was -49K jobs lost. Therefore, even though the December number is still negative, it’s not as bad as it appears at first glance.
Also, last week, markets have welcomed warmly the US Democrats, winning valuable control of the Senate, giving them the Presidency and both Houses of Congress. Furthermore, Wall Street has opened at a record high after President Joe Biden was confirmed as the next US President though, just hours earlier, there had been riots at the Capitol.
This strongly suggests that the optimistic market mood will carry on into the coming week, and in the Forex markets that means that more money flowing out of the safe-haven US Dollar into currencies seen as riskier such as the Australian and New Zealand Dollars, the British Pound, and the Euro.
This week is not as busy as other weeks with the focal point to be the ECB President Lagarde Speaking and the monthly US Consumer Price Index on Wednesday. On Thursday we have the US Unemployment Claims and on Friday the monthly US retails sales which is a gauge of inflation. On Monday, Japanese banks will be closed in observance of Coming-of-Age Day.
EUR/USD
The EUR/USD pair has been climbing solidly since the start of November and it would now be a surprise if it did not test the 1.24 price, if not in the coming week then soon after.
The Covid-19 pandemic has slipped into the backdrop in the markets on an assumption that it will be defeated by the new vaccines that have been developed.
FORECAST: LONG
Resistance: 1.2250, 1.2300, 1.2350
Support: 1.2200, 1.2150, 1.2100
AUD/USD
The pair has room to extend, as, in the daily chart, the pair continues to grow far above bullish moving averages.
In the short term, according to the 4-hour chart, the pair is below a still bullish at the 20 SMA, while the Momentum indicator recovers below its midline, suggesting that the pair may need to advance the 0.7800 price zone to gather bullish momentum.
FORECAST: NEUTRAL
Resistance: 0.7800, 0.7850, 0.7900
Support: 0.7700, 0.7650, 0.7600
USD/CAD
Although the jobs reports from the neighbouring countries were negative, both were better than the headlines suggested. Although the pair has been in a long-term down trend, the doji candle on a weekly timeframe shows that the market is undecided at this point in the weekly descending wedge and bulls may be ready to push the pair higher.
FORECAST: NEUTRAL
Resistance: 1.2700, 1.2750, 1.2900
Support: 1.2650, 1.2600, 1.2550
GBP/USD
The Sterling rally has halted at a convergence trend resistance into the start of the year. From a trading standpoint, the threat for a larger correction remains while below 1.3675 – ultimately a larger pullback may offer more favourable opportunities closer to uptrend support.
FORECAST: LONG
Resistance: 1.3600, 1.3650, 1.3700
Support: 1.3500, 1.3450, 1.3400
GOLD (XAU/USD)
Gold recovered some ground at the weekly closing, although booked a 2% loss on Friday. The yelloe metal could see a quick pullback before the downside resumes. The Daily RSI has pierced through the midline, into the bearish zone.
FORECAST: SHORT
Resistance: 1850, 1900, 1950
Support: 1825, 1800, 1750
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