An exceptional week has finally ended as we have seen big volatility in the FX Market.
Looking at today’s economic releases, all eyes were turned on the U.S jobs report.
In the morning, both German Factory Orders MoM and YoY came out less than expected in December at -0.7% and 2.7% compared to estimates of -0.5% and -1.4% respectively.
Regarding the U.S figures, the economy added only 151K new jobs in January against forecasts of 190K. In the meantime, the unemployment rate fell to 4.9% down from 5.0% previously. The labor force participation rate matched expectations at 62.7% while the Average Hourly earnings jumped to 0.5% in a monthly basis compared to 0.0% in December.
In Canada, the unemployment rate increased to 7.2% up from 7.1% while the economy has lost 5700 jobs during this month. The participation rate in Canada remains unchanged at 65.9.
The U.S Dollar was very choppy following these news as investors took some time to digest these confusing numbers.
The Euro did an attempt to overtake yesterday’s high located near 1.1240 level but failed as we have seen big sellers coming around this level.
The single currency dropped to as low as 1.1110 before to bounce back and stabilize around 1.1150, which keeps the bullish trend in the near-term intact.
The nearest support zone for the Euro is sitting at 1.1060/70 levels and should give strong support to the pair in the next days. The Euro is likely to keep trading higher towards 1.1260 zone as far as 1.1060 low is in place. Otherwise, we may see a deeper correction to the downside before we see new buyers.
The outlook is positive in the short-term as prices succeeded to break higher from a 2-month range. The weekly close above 1.1100 mark is crucial for the future price action.
In the other side, the British pound failed to preserve a part of its weekly gains as cable found strong resistance at the 50% Fibonacci retracement of the recent decline from 1.5240 peak.
Prices topped exactly at this technical level around 1.4660 level, which may signal a move lower towards 1.4375 level in the coming days as far as this top is in place.
One pair that caught our interest today is the USD/CAD as the pair rallied more than 1% during the U.S trading session.
Technically, we have been watching 1.3785 level as a break above it was about to confirm a bullish reversal in the hourly chart.
As expected, bulls managed to overtake this resistance level and we saw a big rally in the pair, prices jumped to above 1.3900 mark and we believe that the short-term correction seen from 1.4700 came to an end.
During the coming week, we will focus on 1.3930 level, from where we expect a move lower in the beginning of the week before a continuation higher to occur.
Finally, we want to talk about the recent move in Gold, the yellow metal strengthened in 2016 as we have seen a global recovery in the commodity market.
Looking at the technical picture, a clear bullish divergence in the RSI indicator has been confirmed today after gold ended the week above 1170$ per ounce.
Consequently, we believe that prices may extend gains towards 1176$ per ounce followed by the crucial barrier around 1195$. Traders should watch the yellow metal carefully during the next days and we are aware that a weekly close above 1195 level will confirm a potential med-term low in Gold at 1045$ and should open the way to as high as 1240$ during the first half of this year.
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