Waiting for the dust to settle in US jobs report aftermath

Next 24 hours: Commodity currencies hit as gold and oil slide

Today’s report: Waiting for the dust to settle in US jobs report aftermath

The market wasn’t really sure what to make of Friday’s jobs report after the data produced some contrasting results. The wide dispersion of data points left many a trader scratching their head and the resulting price action reflected this.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.1045 – 2 January high – Medium
  • R1 1.0999 - 5 January high – Medium
  • S1 1.0877 - 5 January low – Medium
  • S2 1.0869 – 14 December low – Medium

EURUSD – fundamental overview

Odds for a March ECB rate cut still sit at about 50% after coming down from a near certainty a month ago. But the Euro was well supported on Friday on the back of a jump in Eurozone inflation data. The market was able to shrug off an awful German retail sales report. Key standouts on Monday’s calendar come from German trade, German factory orders, Eurozone sentiment and confidence reads, Eurozone retail sales, and US consumer inflation expectations.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.2849.

  • R2 1.2828 – 28 December high – Strong
  • R1 1.2771 – 5 January high – Medium
  • S1 1.2610 – 2 January low – Medium
  • S2 1.2600 – Figure – Medium

GBPUSD – fundamental overview

The Pound outperformed on Friday as BOE rate cut bets were pared back on stronger UK data. UK new car registrations rose, while construction PMIs advanced. Implied year-end rates in the UK extend gains on the week at a greater rate than US and Europe. Key standouts on Monday’s calendar come from German trade, German factory orders, Eurozone sentiment and confidence reads, Eurozone retail sales, and US consumer inflation expectations.

USDJPY – technical overview

The market remains confined to a strong uptrend, with sights set on a retest and break of the multi-year high from 2022 at 151.95. A push through this level will open the next major upside extension towards 155.00. Key support comes in at 140.00, with only a weekly close below to delay the constructive outlook.

  • R2 145.98 – 5 January high – Medium
  • R1 145.00 – Figure – Medium
  • S1 142.85 – 4 January low – Medium
  • S2 140.25 – 28 December low – Strong

USDJPY – fundamental overview

There have been some positive updates out of Japan including consumer confidence and a rise in corporate pay, though the Yen has been weighed down for consecutive sessions on fallout from the earthquake and a repricing of BOJ expectations as a consequence. Key standouts on Monday’s calendar come from German trade, German factory orders, Eurozone sentiment and confidence reads, Eurozone retail sales, and US consumer inflation expectations.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.6871– 28 December high – Strong
  • R2 0.6748 – 5 January high – Medium
  • S1 0.6640– 5 January low – Medium
  • S2 0.6600 – Figure – Medium

AUDUSD – fundamental overview

Aussie was weighed down last week on weak action in China and metals under pressure. Key standouts on Monday’s calendar come from German trade, German factory orders, Eurozone sentiment and confidence reads, Eurozone retail sales, and US consumer inflation expectations.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3415 – 15 December high – Strong
  • R1 1.3400 – Figure – Medium
  • S1 1.3287 – 5 January low – Medium
  • S2 1.3223 – 2 January low – Medium

USDCAD – fundamental overview

The Canadian Dollar underperformed its peer group on Friday after Canada jobs data disappointed. Key standouts on Monday’s calendar come from German trade, German factory orders, Eurozone sentiment and confidence reads, Eurozone retail sales, and US consumer inflation expectations.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

  • R2 0.6412 – 14 July high– Strong
  • R1 0.6370 – 28 December/2023 high – Medium
  • S1 0.6200 – Figure – Medium
  • S2 0.6181 – 5 January low – Strong

NZDUSD – fundamental overview

Kiwi flow has been predominantly directed by the pulse of global sentiment. Key standouts on Monday’s calendar come from German trade, German factory orders, Eurozone sentiment and confidence reads, Eurozone retail sales, and US consumer inflation expectations.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended, begging for a deeper correction ahead. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4800 will be required to delay the outlook. Next key support comes in at 4536.

  • R2 4800 – Round Number – Strong
  • R1 4796 – 29 December/2023 high – Medium
  • S1 4643– 13 December low – Medium
  • S2 4536 – 30 November low – Strong

US SPX 500 – fundamental overview

The Fed has finally bent to the will of the market, with the December 2023 policy decision revealing rate projections coming down from previous and more in line with what the market has been looking for. This has translated to more investor friendly policy going forward, which could now open the door for a run to fresh record highs in 2024. At the same time, we worry inflation remains a risk both the market and Fed are not taking as seriously as needed, which could once again force the Fed back into a more restrictive path and weigh heavily on stocks.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1900 on a monthly close basis ahead of the next major upside extension towards 2500.

  • R2 2175 – 4 December/Record high– Strong
  • R1 2100 – Round Number – Medium
  • S1 2015 – 15 December low – Medium
  • S2 1973 – 13 December low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less stable and upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

Peformance chart: 30-Day Performance vs. US dollar (%)

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