Key Highlights
- USD/JPY found support near 102.60 and started a steady recovery.
- There was a break above a key bearish trend line at 103.50 on the 4-hours chart.
- Gold price corrected lower, while crude oil price remains elevated.
- The US nonfarm payrolls could change 71K in Dec 2020, less than the last 245K.
USD/JPY Technical Analysis
The US Dollar followed a bearish path until it found support near 102.60 against the Japanese Yen. USD/JPY started a steady recovery wave above the 102.80 and 103.20 resistance levels.
Looking at the 4-hours chart, the pair traded as low as 102.59 before it climbed above 103.20. There was also a break above a key bearish trend line at 103.50.
The pair even broke the 50% Fib retracement level of the downward move from the 103.89 swing high to 102.59 low. There was a follow up move above the 103.60 level and the 100 simple moving average (red, 4-hours).
However, the pair is still facing a strong resistance near the 103.95 and 104.00 levels. A close above 103.95 and 104.00 could open the doors for a steady increase. In the stated case, the pair could jump towards the 104.50 and 104.80 levels.
On the downside, the 200 simple moving average (green, 4-hours) might act as a support near 103.75. The first key support is near the 103.40 zone (the recent breakout zone). Any more losses could lead towards the 103.00 support level.
Fundamentally, the US ISM Services PMI for Dec 2020 was released yesterday by the Institute for Supply Management (ISM). The market was looking for a minor decline from 55.9 to 54.6.
The actual result was above the market forecast, as the US ISM Services PMI climbed higher to 57.2 in Dec 2020, representing a seventh straight month of growth for the services sector.
The report added:
The composite index indicated growth for the seventh consecutive month after a two-month contraction in April and May. In December, a slight uptick in the rate of services-sector growth continued.
Looking at EUR/USD, there was a downside correction, but dips remained protected below 1.2220. Gold price also corrected lower after testing the $1,955 zone.
Economic Releases
- US nonfarm payrolls Dec 2020 – Forecast 71K, versus 245K previous.
- US Unemployment Rate Dec 2020 – Forecast 6.8%, versus 6.7% previous.
- Canada’s employment Change payrolls Dec 2020 – Forecast -27.5K, versus 62.1K previous.
- Canada’s Unemployment Rate Dec 2020 – Forecast 8.6%, versus 8.5% previous.
