What’s Next After The Latest Round Of U.S. Dollar Strength?
Friday’s U.S. NFP release showed the U.S. jobs market in good health with 353k new jobs created in January compared to expectations of only 180k. Following these healthy job numbers, traders pushed back on Federal Reserve rate cut expectations while a March rate cut is currently off the table.
The U.S. dollar strengthened strongly in response to Friday’s NFP report and provided short traders in both EUR/USD and GBP/USD some good gains.
Compared to last week, the economic calendar this week is light in terms of potential market-moving data and risk events. Traders should thus prepare for range-bound trades and smaller profits.
The EUR/USD slipped below 1.0790 and further towards 1.0760 but we expect that a short-term support is coming in at around 1.0750, which is why bulls could go for a test of the area around 1.0860. Falling below 1.0740, on the other side, could lead to a sell-off towards 1.0660.
The GBP/USD remained within its sideways range between 1.28 and 1.26. Looking for short entries, we will wait for price breaks below 1.2590 with a lower target at around 1.2560 and further for a fall below 1.2540 with a next target at 1.25. On the topside, a resistance is currently seen at 1.2750.
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