Top Trade Setups in Forex - Unemployment Claims In Focus
|The U.S. stocks closed higher as both the U.S. and Iran hinted at de-escalation. An upbeat report on private jobs also boosted market sentiment. The Dow Jones Industrial Average rebounded 161 points (+0.6%) to 28745, the S&P 500 gained 15 points (+0.5%) to 3253, and the Nasdaq Composite was up 60 points (+0.7%) to 9129.
Regarding U.S. economic data, the Automatic Data Processing (ADP) jobs report showed that the economy added 202,000 jobs in December, better than +160,000 expected, and +124,000 in November. Later today, the U.S. Labor Department will report initial jobless claims for the week ended January 04 (220,000 expected). For now, investors' eyes remain on the U.S. Jobless Claims, which are due later in the day.
USD/JPY - Overbought Pair Bracing for Retracement!
The USD/JPY was closed at 109.103 after placing a high of 109.243 and a low of 107.647. Overall the movement of USD/JPY pair remained bullish throughout that day.
The safe-haven Japanese Yen jumped to its three months highest level on the back of missile attacks on U.S. troops by Iran on early Wednesday. The pair USD/JPY moved to its lowest level since October below 107.7 level amid increased demand for Japanese Yen, safe-haven currency. Rockets were shot on two Iraqi airbases hosting U.S. troops.
The attacks were made hours after the funeral of Iranian military commander Qassem Soleimani. He was killed by a U.S. drone attack in Baghdad last week, which created a new crisis in the Middle-East and renewed the fears of a wider conflict.
Due to Japan's status as the world's biggest creditor, the Yen is regarded as a safe-haven currency in times of turmoil. This escalation in U.S. & Iran conflict gave a push to Japanese Yen on Wednesday and raised it 0.6% to the three months highest level.
However, after dropping to 3 months lowest point at 107.647, USD/JPY in later sessions on Wednesday started to rise again. The surge in USD/JPY pair prices came in the market after the US Donald Trump comments on Iranian airstrikes.
U.S. President Donald Trump said that the damage assessment was so far well, and there were no American casualties during the attacks. He also said that Iran must be done with military retaliation now.
USDJPY - Daily Technical Levels
| Support | Pivot Point | Resistance |
| 108.5 | 108.87 | 109.47 |
| 107.9 | 109.84 | |
| 106.93 | 110.81 |
USD/JPY - Daily Trade Sentiment
The USD/JPY has made a massive bullish recovery from 107.600 to 109.450. As we can see on the 4-hour chart, the pair has entered the overbought zone. The Stochastic's value is around100, which is suggesting solid chances for a bearish retracement. The USD/JPY pair may slip lower to complete 38.2% Fibonacci retracement around 108.790.
Closing of candles above this level are likely to support USD/JPY; elsewhere, we may see the further drop until 108.600. At the moment, I will be looking to take sell trades below 109.400 to target 109 and 108.750.
USD/CAD - Loonie Trade-In Line with Forecast
The USD/CAD was closed at 1.30384 after placing a high of 1.30435 and a low of 1.29759. Overall the movement of the USD/CAD pair remained bullish that day. The pair USD/CAD dropped in early session on Wednesday but started to move in reverse direction amid a sharp fall in crude oil prices. The pair climbed above 1.304 level on Wednesday and ended its trading session with a bullish candle for the 2nd consecutive day.
Investors in financial markets looked past the latest escalation between the U.S. and Iran conflict, which created geopolitical tensions in Middle-East. This gave a sharp fall in crude oil prices and weighed heavily on commodity-linked Lonnie.
WTI Crude oil prices lost almost 6% from its 8-months highest point on Wednesday after the news of Iranian airstrike on U.S. troops in the Iraqi airbase. The drop in crude oil put pressure on the Canadian dollar and caused USD/CAD to move in an upward trend.
The stronger U.S. dollar also supported the upward movement of USD/CAD after the release of ADP Non-Farm Employment Change. The ADP Non-Farm Employment increased in the month of December to 202K from the expected 160K and supported the U.S. dollar on Wednesday.
On the other hand, the Crude Oil Inventories of the United States for the past week increased to 1.2M from the expectations of -3.4M and weighed heavily on crude oil prices. Which, in turn, put pressure on commodity-linked Lonnie and added in the upward trend of USD/CAD.
The stronger USD and weaker Canadian dollar moved USD/CAD prices above 1.304 level.
USD/CAD- Daily Technical Levels
| Support | Pivot Point | Resistance |
| 1.2996 | 1.302 | 1.3063 |
| 1.2952 | 1.3087 | |
| 1.2885 | 1.3155 |
USD/CAD- Daily Trade Sentiment
The USD/CAD is trading in line with our forecast as it continues to recover from previous losses. The pair is currently trading at 1.3060, completing the 50% Fibonacci retracement. Violation of this level can extend bullish rally until 1.3090, which marks 61.8%.
The RSI and Stochastics are in the buying zone, and these may drive more buying in the USD/CAD currency pair. The idea is to look for buying trades above 1.302 to target 1.3090 today.
AUD/USD – Choppy Session Continues
The AUD/USD was closed at 0.68643 after placing a high of 0.68851 and a low of 0.68488. Overall the movement of AUD/USD remained bearish throughout the day. The pair AUD/USD dropped for the 5th consecutive day on Wednesday, below the level of 0.68500.
At 2:30 GMT, the AIG Construction Index for the month of December showed a contraction in the construction sector of Australia and weighed on the Australian dollar. At 5:30 GMT, the closely watched Building Approvals for the month of November from the Australian Bureau of Statistics showed an increase in buildings approved for construction by 11.8% from the expected 2.1% and supported Aussie.
The stronger than expected building approval data from Australia failed to raise the AUD/USD prices on Wednesday amid the stronger U.S. dollar. The U.S. dollar remained strong throughout the day after the release of ADP Non-Farm Employment Change at 18:15 GMT, which showed a growth in the employed number of people in the month of December by 2020K against the expectations of 160K.
The stronger U.S. dollar put pressure on AUD/USD prices on Wednesday. The pressure also came from another factor, which was the expectation of losing monetary policy in its upcoming meeting by Reserve Bank of Australia.
The minutes from the December meeting of RBA revealed that the policymakers wanted to reassess the economic conditions and policy stance in February. The markets are hoping for one further rate cut by RBA by the middle of 2020, and it is weighing on the Australian dollar.
AUD/USD - Technical Levels
| Support | Pivot Point | Resistance |
| 0.6848 | 0.6867 | 0.6884 |
| 0.683 | 0.6903 | |
| 0.6794 | 0.694 |
AUD/USD - Daily Trade Sentiment
The AUD/USD has not traded much lately as it continues to exhibit choppy trading sessions in between 0.6880 - 0.6855. The AUD/USD is still holding below 50 EMA which is likely to extend resistance around 0.6910. The AUD/USD pair may gain support at 0.6831, which actually is a double bottom support mark. Under 0.6885, the AUD/USD can trade bearish until 0.6835 and 0.6804 trade level.
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