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UFXBank Forex Outlook: NFP Supports Stronger Dollar

Written by UFXBank Research Team
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USD Dollar (USD) – The Dollar strengthened versus most of the major currencies after U.S. nonfarm payrolls rose more than expected last month (151K vs. 63K forecast) and caused big movements on the pairs. There were also declarations from Bernanke regarding inflation, in which it is expected to be kept low and stable, supported by a stronger Dollar. The NASDAQ and Dow Jones increased a by 0.06% and 0.08% respectively. Crude oil strengthened by 0.5%, closing at $86.91 a barrel, the highest price in two years. Gold (XAU) rose by 1.1%, closing at $1397.70 an ounce, a new historic record. Today, FOMC Member Bullard and Warsh will Speak.

Euro (EUR) – The Euro weakened versus the Dollar after Retail Sales dropped 0.2% in September (-0.2% vs. 0.3% forecast) and positive payrolls data which came from the US, supported a stronger Dollar. The EUR/USD has a strong upwards trend, and as long as the price is above the 10 moving average and shows a positive RSI, a long position is preferred. If the pair breaks below the 1.3980 level, the price could decrease to 1.3900. Overall, EUR/USD traded with a low of 1.4024 and with a high of 1.4230. Today, German Industrial Production is expected to decline from 1.70% to 0.40%.

EUR/USD – Last: 1.3944

Resistance

1.4085

1.4200

1.4285

Support

1.3865

1.3800

British Pound (GBP) – The Pound declined from near a ten month high in Forex trading versus the Dollar as a government report showed U.S. employers added more jobs than forecast last month and declarations from Bernanke about lower inflation expectations, led investors to prefer the Dollar instead of the Pound. The momentum of the GBP/USD is absolutely bullish, and as long as the price is trading above 1.6100 levels and above the 10 moving average, a long position is preferred. Overall, GBP/USD traded with a low of 1.6166 and with a high of 1.6279. No economic data is expected today.

GBP/USD - Last: 1.6120

Resistance

1.6215

1.6300

Support

1.6080

1.5960

1.5875

Japanese Yen (JPY) –The Yen was weak versus the Dollar after very good data from the US supported a stronger Dollar, drifting the Yen as well. The USD/JPY has been trading around 80.00-81.00 area. In the last few days, the main support line on the daily chart is still located at 80.00, and the momentum is still bearish as long it‘s trading below the 82.00 level. Overall, USD/JPY traded with a low of 80.62 and with a high of 81.46. No economic data is expected today.

USD/JPY-Last: 81.22

Resistance

81.50

Support

81.10

80.75

80.50

Canadian dollar (CAD) – The Canadian Dollar erased an earlier loss versus the US Dollar on Friday as a report was released showing the U.S. added more jobs than forecast in October. In addition, the Unemployment Rate came out better than forecast (7.9 vs. 8.0), and Building Permits came out at 15.3% vs. 3.0% forecast, both supporting a stronger Canadian currency. The support level of the USD/CAD on the daily chart is located at 0.9980, and if the USD/CAD breaks below this level, a short position is preferred and the momentum continues to be positive for the Canadian Dollar. Overall, USD/CAD traded with a low of 0.9991 and with a high of 1.0089. Today, Housing Starts are expected at 181K vs. 186K prior.

USD/CAD - Last: 1.0019

Resistance

1.0090

1.0125

1.0200

Support

0.9990