EUR/USD: soft US employment data keeps the pair bullish

EUR/USD Current price: 1.0536

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The American dollar edged sharply lower at the beginning of the day, with the EUR/USD pair rallying to its highest for the week, to 1.0574. The movement was triggered by the minutes of the US FOMC Minutes, which showed that, despite two to three rate hikes are likely this year, there is significant uncertainty surrounding the Trump administration and its effects on the economy. While less hawkish than expected, Minutes were far from dovish, but at least it provided a nice excuse to speculators to take some profits out of the table. The pair later fell to 1.0482, despite the EU released a better-than-expected PPI figure for November, as wholesale inflation rose by 0.3% in the month, and by 0.1% when compared to an year earlier, beating market's expectation, although the YoY reading suffered a strong set-back from previous 0.8%.

In the US, employment data is taking center stage, ahead of the release of Nonfarm Payrolls this Friday. Challenger Job Cuts in December showed that the number of jobs lost in the month were 42% higher than those from a year earlier, as US employers announced plans to shed 33,627 jobs. The ADP private employment survey printed 153K, missing expectations of 170K while November reading suffer a 1,000 downward revision. Finally, weekly unemployment claims brought some fresh air, falling to 235K from a previously revised 263K.

The EUR/USD pair, recovered pass the 1.0530 Fibonacci level ahead of the US opening, with services PMI's still pending of release. Technically, the 1 hour chart shows that the price is back above a bullish 20 SMA, whilst technical indicators have bounced sharply from their mid-lines, supporting a retest of the daily high at 1.0574. In the 4 hours chart, technical indicators have also bounced sharply , whilst the price remains above its 20 and 100 SMAs. Still, a break above the daily high is required to confirm a more sustainable recovery during the upcoming sessions.

Support levels: 1.0530 1.0490 1.0445

Resistance levels: 1.0575 1.0620 1.0650

GBP/USD Current price: 1.2314

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Strong UK data continues to support the Pound, despite Brexit worries, as according to Markit, the services sector grew by more-than-expected last December. The Services PMI came at 56.2, beating expectations of 54.7 and previous 55.2 and the strongest reading since July 2015. The GBP/USD however, was unable to sustain its early gains, and remained capped by selling interest around 1.2320 during the European morning, unable to advance even after the release of soft US employment data. The short term picture shows that the upward potential remains limited, as in the 1 hour chart, the price is unable to extend beyond a flat 20 SMA, whilst technical indicators have turned modestly higher after poor US data, but remain within neutral territory. In the 4 hours chart, technical indicators have posted a modest recovery from their mid-lines, whilst the price is holding above a horizontal 20 SMA.

Support levels: 1.2260 1.2220 1.2185

Resistance levels: 1.2330 1.2360 1.2400

USD/JPY Current price: 116.18

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FED's uncertainty triggers yen's rally. The USD/JPY pair plummeted to 115.72, its lowest since December 14th, after the market rushed to sell the greenback following the release of FOMC Minutes, showing that "uncertainty" is the new leitmotif of the US Central Bank. The pair bounced up to 116.78 during the European morning, but resumed its decline afterwards, weighed by poor US employment data. The pair has turned strongly bearish, at least in the short term, as in the 1 hour chart, the price is well below its 100 and 200 SMAs, both converging with a descendant trend line around 117.20, whilst technical indicators have turned sharply lower within negative territory, after correcting the extreme oversold conditions reached earlier in the day. In the 4 hours chart, technical indicators head sharply lower, resuming their declines after a modest upward correction, whilst the price accelerated below a bearish 100 SMA, all of which supports a bearish extension, particularly on a break below 116.00.

Support levels: 116.00 115.65 115.20

Resistance levels: 116.40 116.85 117.30