A strong report on the US employment market contributed to the strengthening of the US currency and the breakdown of important strategic levels in major currency pairs. Thus, the pound/US dollar pair has strengthened below 1.2600, the EUR/USD pair is trading below 1.0800, and buyers of the USD/JPY pair have updated recent highs near 149.00. We are also seeing a resumption of the downward trend in commodity currencies.
The British currency managed to rise to 1.2780 after the Bank of England meeting. However, pound buyers failed to resume the long-term upward trend, and after the publication of nonfarm payrolls, the pair suffered losses of over 150 pp. Yesterday on the GBP/USD chart the downward trend resumed, the pair almost tested 1.2500. If the price does not return above 1.2600 in the near future, the downward movement may resume with renewed vigor.
Today at 12:30 GMT+3, we are waiting for data on the business activity index in the UK construction sector for January. Tomorrow, the Halifax house price index for the same period will be released.
The single European currency left the medium-term flat corridor of 1.1000-1.0820. Technical analysis of EUR/USD shows that the 1.0800 level is now acting as resistance. If the current mood in the market continues, the price may test 1.0600-1.0500.
Today at 10:00 GMT+3, the data on the volume of production orders in Germany for December will be published. A little later, indicators on expected inflation for the eurozone as a whole will be released.
Last week, the US dollar/yen pair traded at figure 146, but after the release of positive employment data it managed to strengthen above 148.00. On the USD/JPY chart, the price has updated its January highs of the current year. If dollar buyers manage to stay above 148.00, the price may continue to rise in the direction of 151.00-150.00. Cancellation of the upward scenario may be a departure below last week’s low at 145.80.
From the point of view of fundamental analysis, today at 20:00 GMT+3, the data on the short-term forecast of the situation in the energy markets from the EIA will be published. Also scheduled to speak at this time is FOMC member Loretta Mester.
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