AUD/USD: 0.8970EUR/USD: 1.3590The ECB left rates unchanged, as expected, but the Euro jumped higher after Mario Draghi said that there was no deflation issue in the EU, which indicated to the market that there is unlikely to be an easing bias any time soon. He reiterated that the ECB is "firmly determined to maintain the high degree of monetary accommodation and to take further decisive action if required, and expects interest rates to remain at present or lower levels for some time to come”.
Elsewhere, the dollar came under further pressure when the US trade deficit came in wider than expected at US$ -38.7b in December, while the Initial Jobless claims dropped to 331k. This comes ahead of today’s main event, the US employment numbers/NFP (exp 6.7%/185K), and a weak reading here would put the heat on the dollar, pushing the Euro higher once more.
Technically, having been up to a high of 1.3618, the Euro is making an attempt to break back into the daily cloud and there is added strong resistance here at 1.3605, where it is also trying to break back above the 100 DMA . If this can be overcome, - which really depends on the outcome of the NFP -, we would then run into resistance at 1.3635 (38.2%), beyond which, lies the descending trend resistance at 1.3660, and then the 50% pivot of the move from 1.3892/1.3476 at 1.3685 (also the daily Kijun). Above this would really see the bears scrambling as we head back to 1.3700 and above, possibly to the 24 Jan high at 1.3738. Above that, - which I don’t expect to see today -, the way would once again be open to 1.3800.
On the downside, which would need a decent NFP reading to put the confidence back into the dollar, 1.3575 and 1.3525 are now minor supports ahead of 1.3500, with stronger bids likely to be found at around 1.3480. Below there, which seems unlikely to day, would see run towards 1.3455 (23.6% of 1.2042/1.3892 & 38.2% of 1.2755/1.3892) and eventually, 1.3435 (76.4% of 1.3294/1.3892). Below that, would bring the 21 Nov low of 1.3398 into focus, ahead of the 200 DMA at 1.3373.
It will largely be a day of sitting on hands, waiting for the US data, but before then the Euro may move around a bit on the back of the German Trade Balance and Industrial production data. Be nimble and have a good w/e!
Economic data highlights will include:
German Trade Balance, Industrial production, US Unemployment/NFP
