Rebound for the U.S. Dollar?

Dear Traders,

Last Friday the markets tended to lack direction and did not provide attractive opportunities to invest profitably. The U.S. Non-Farm Payrolls report showed a stronger-than expected job growth of 211k with a steady unemployment rate. Average hourly earnings were in line with expectations and showed a slightly lower rise. All in all, payrolls data supported the view that the U.S. economy can withstand a rate increase by the Federal Reserve. The reactions of the market, however, have been very modest. It could be observed that market reactions to incoming data have been fundamentally changed showing that as long as there are no major surprises, the market does not react anymore.

What is important for the week ahead?

The most relevant reports and events are scheduled for release towards the end of this week. On Thursday we will have the Bank of England’s Rate Decision and a speech by BoE Governor Carney. The U.S. Retail Sales report will be the most important piece of data from the U.S., due for release on Friday. From the Eurozone we have the Gross Domestic Product figures, scheduled for release on Tuesday.

There are no important reports scheduled for release today, but sterling traders should pay attention to a speech by BoE Governor Carney at 15:00 GMT. In short-term time frames, GBP would need to break below the current support at 1.5080 and further 1.5050 in order to reinvigorate bearish momentum. A current resistance is seen at 1.5150.


Bearish Bias: Technically the currency pair is tending towards a break of the 1.0850-level. Based on the descending triangle, we will focus on a break of the 1.0850/30 area in order to sell the pair towards lower levels. Lower targets could be at 1.0790 and 1.0750. Resistances are seen at 1.09 and 1.0950.


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