AUD/USD: 0.8960EUR/USD: 1.3630The weather-affected, underwhelming NFP number of 113K (exp 185K) sent the dollar immediately lower and saw the Euro spike up to 1.3642, the day’s high, with the rest of the session being spent chopping around either side of 1.3600 and then squeezing slightly higher into the close.
Although it was mostly disappointing for the dollar bulls, there was some good news out of the US jobs data, with the headline jobless rate falling to 6.6% while at the same time the participation rate grew, meaning that more people are actually in work. The data is unlikely to change the Fed’s current path of monthly tapering, with the next FOMC due on March 18/19.
The Euro had earlier dipped lower, and was probably held back from making further gains, by the news that the German constitutional court had decided that the ECB bond buying programme could be illegal because it potentially over-steps its mandate, and referred its decision to the European Court of Justice.
Technically the Euro has closed the week back above the 100 DMA and the daily indicators have also turned higher, suggesting that the Euro could have some more gains ahead, at least early in the week, although overall, the choppy conditions look likely to continue as we are now back in the middle of the daily cloud. There is plenty of resistance ahead, so any upside progress should be slow, with little to drive it too far early in the week. Immediately ahead, having closed right on it, is the first Fibo resistance at 1.3635 (38.2% of 1.3892/1.3476) which has so far contained the topside apart from the brief spike on the data release, to 1.3642. A break of this would see a run up towards the descending trend resistance at 1.3660, and then to the 50% pivot of the move from 1.3892/1.3476 at 1.3685 (also the daily Kijun and weekly Kijun) which should be strong. 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 yet, if at all -, the way would once again be open to 1.3800.
1.3600 now becomes minor support, and there would seem to be plenty of bids below here all the way down to 1.3500. Minor Fibo levels can be seen at 1.3580, 1.3560 and 1.3540 and the 100/200 HMA’s are about to cross higher at around 1.3550, which would also add support.
The 4 hour indicators are pointing higher and an early test of the upside does look like the path of least resistance on Monday, although the only driver will be the Sentix Investor Survey, so overall I suspect that it will be choppy but rather directionless and that 1.3600/80 should largely cover it.
The key events this week will be Yellen's testimony, tomorrow and then Fridays EU Q4 GDP
Economic data highlights will include:
M: Sentix Investor Survey
T: Janet Yellen testimony to Congress, Wholesale Inventories
W: Industrial Production, Draghi speech
T: German CPI, ECB Monthly Report, US Retail Sales, Business Inventories
F: German, EU GDP, Trade Balance, US I/P, Capacity Utilisation, Rts/Michigan Consumer Sentiment Index.
