The Dollar Is Strengthening, Driven by Employment Data

Yesterday's US labour market data indicated an increase in employment, dampening hopes of an interest rate cut. The Labor Department stated on Thursday that initial claims for state unemployment benefits fell by 16,000 to 187,000, seasonally adjusted, for the week ending January 13, which is the lowest level since September 2022 and below economists' expectations of 207,000. Separate data from the US Department of Commerce showed that single-family housing construction slowed in December after a previous period of growth. The low supply in the secondary market continues to support new construction. Throughout the day, the US will release data on existing home sales, which may increase by 0.8-0.9%, equivalent to around 3.82 million units sold, as well as the University of Michigan Consumer Confidence Index, with forecasts suggesting a slight increase from 69.7 points to 70.0 points.

EUR/USD

The EUR/USD pair is decreasing after an earlier rise. According to EUR/USD technical analysis, immediate resistance can be seen at 1.0906, and a breakthrough could trigger an upward move to 1.0958. On the other hand, the nearest support is visible at 1.0844, and a breakthrough below may lead the pair to 1.0800. The euro's exchange rate has remained nearly unchanged as investors digest the December meeting minutes of the European Central Bank. According to reports on Thursday, ECB policymakers expressed confidence in achieving the inflation target but acknowledged numerous risks, justifying the continuation of a stable policy and high borrowing costs. The ECB kept interest rates unchanged at the meeting and emphasised the absence of upcoming rate hikes. With the focus shifting to the ECB's January policy decision, the market is entering a period of calm.

The previous downward channel is still in place. The price has now retreated from the upper channel boundary and may continue to decline.

GBP/USD

On the GBP/USD hourly chart, the pair is decreasing after an earlier session rise. Immediate resistance can be seen at 1.2715, and a breakthrough could lead to an increase to 1.2785. On the other hand, the nearest support is visible at 1.2647, and a breakthrough below may lead the pair to 1.2596. Activity is decreasing following the release of UK retail sales data. The indicator declined from 0.2% to -2.4% on an annual basis and from 1.4% to -3.2% on a monthly basis. The core annual figure dropped from 0.5% to -2.1%, and the monthly figure dropped from 1.5% to -3.3%. The data turned out to be significantly worse than analysts' preliminary estimates. Traders also continue to assess previously published inflation data in the UK, where the Consumer Price Index increased by 0.4% in December after a 0.2% decrease the previous month, and the annual figure stabilised at 5.1%, surpassing the forecast of 4.9%.

The previous downward channel is still in place. The price has now bounced off the upper boundary and may continue to decline.

USD/JPY

On the USD/JPY chart, the pair is showing moderate growth, testing the 148.45 level for a breakthrough and updating local highs at the end of November. Strong resistance can be seen at 148.80, and a breakthrough could lead to an increase to 149.60. On the other hand, the nearest support is visible at 147.64. A breakthrough below may lead the pair to the 145.58 level. The yen is once again under pressure amid new evidence of slowing inflation, which may prompt the Bank of Japan to maintain a "dovish" stance. Today's released data reflected a decrease in the national Consumer Price Index in December from 2.8% to 2.6%, while the index excluding food and energy adjusted from 3.8% to 3.7%. Additionally, the business activity index in the services sector in November decreased by 0.7% after a 0.8% decline in the previous month.

The upward channel is still in place. The price is currently moving upward along the lower channel boundary.