The Japanese Yen staged a strong rally in the previous session, leading to a significant 2% drop in the USD/JPY pair overnight. The Yen’s rise was largely influenced by comments made by BoJ Governor Kazuo Ueda following a meeting with the Japanese Prime Minister.
Governor Ueda mentioned that they are exploring various options to move the country out of its negative interest rate regime. Economists are increasingly expecting the BoJ to hit its inflation target in the near term, speculating on a possible end to ultra-loose monetary policy as early as April next year. Meanwhile, investors remain cautious as they await the release of the U.S. Nonfarm Payroll data later today. The outcome of this economic indicator will serve as crucial evidence on the state of the labor market and will shape expectations for the Federal Reserve’s policy meeting scheduled for next week.
Dollar Index, H4
The U.S. Dollar continues to slide, weighed down by a series of disappointing employment reports that cast a shadow over the upcoming Nonfarm Payroll and Unemployment data. Earlier in the week, data including JOLTs Job Openings and ADP Nonfarm Employment Change for November fell short of market expectations. The string of bearish reports adds uncertainty to the market ahead of the highly anticipated Nonfarm Payrolls release later in the week.
The Dollar Index is trading lower and is currently testing the support level. The MACD shows an increasing bearish momentum, while the RSI is at 45, indicating that the index might extend its losses after the breakout, as the RSI remains below its mid-line.
Resistance level: 104.25, 105.40.
Support: 103.40, 102.50.
GBP/USD, H4
The British Pound saw a modest rise against the U.S Dollar in anticipation of the upcoming Nonfarm Payroll data, which is scheduled for release later today. Traders are strategically positioning themselves for more evidence to support the notion that the U.S. labor market is cooling, fueling speculation that the Federal Reserve may begin lowering interest rates next year. At the same time, traders in the Cable market are exercising patience as they look forward to the Bank of England‘s (BoE) interest rate decision next week, recognizing the importance of both domestic and international factors in shaping the currency‘s trajectory.
The Cable is trading above its near support level at 1.2530 ahead of the key economic event later today. The RSI continues to float in the lower region, while the MACD remains below the zero line, indicating that the bearish momentum remains intact.
Resistance level: 1.2631 1.2729.
Support: 1.2530, 1.2437.
AUD/USD, H4
The AUD/USD rallied in the previous session, driven by a weakening U.S. dollar ahead of the release of the key U.S. employment data. Market participants are eagerly awaiting further evidence to support the notion that the U.S. labor market is cooling, potentially paving the way for the Federal Reserve to consider lowering interest rates next year. In addition, the Australian dollar found support from better-than-expected trade data from China, which pointed to a positive trajectory for the Chinese economy and contributed to the strength of the Aussie dollar.
The AUD/USD found support near the 0.6535 level, and is currently being hindered by its near resistance at the 0.6615 level. The RSI has spiked while the MACD is approaching the zero line from the bottom, indicating that the bearish momentum has been drastically reduced.
