Most Read: US Dollar Jumps After NFPs Smash Estimates, Gold Slumps
The U.S. dollar surged on Friday after economic data revealed that U.S. employers added 353,000 workers in January, nearly double market expectations. The exceptionally robust job creation, along with red-hot average hourly earnings, signals that the economy is holding up remarkably well and may even be reaccelerating, a situation that could deter the Fed from moving off its restrictive stance imminently.
Immediately following the release of the NFP report, Treasury yields rocketed upwards, as traders unwound dovish bets on the central bank’s policy path. These moves may gain traction in the near term if incoming information remains consistent with strong growth and sticky inflation. For this reason, it is imperative to keep an eye on the economic calendar in the coming weeks.
US DOLLAR (DXY INDEX) & US YIELDS
Source: TradingView
Putting fundamentals aside, this article will focus on the technical outlook for three U.S. dollar pairs: EUR/USD. USD/JPY and GBP/USD, dissecting important price thresholds that should be on every trader’s radar in the coming days following the U.S. employment report – a release that brought significant volatility to FX markets.
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| Change in | Longs | Shorts | OI |
| Daily | 13% | -19% | -2% |
| Weekly | 16% | -25% | -4% |
EUR/USD TECHNICAL ANALYSIS
EUR/USD was on track to break the upper boundary of a falling wedge but took a sharp turn to the downside following the U.S. jobs report, dropping towards cluster support at 1.0780. The bulls need to defend this level vigorously; failure to do so could push prices towards 1.0730, followed by 1.0650.
In the event that EUR/USD manages to reverse higher from its current position, technical resistance extends from 1.0840 to 1.0860. Above this key range, the market focus will likely be on the 50-day simple moving average at 1.0915, followed by 1.0950.
EUR/USD TECHNICAL ANALYSIS CHART
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USD/JPY TECHNICAL ANALYSIS
USD/JPY blasted higher on Friday, breaking past key levels, and pressing against trendline resistance at 148.15. With bullish momentum on the U.S. dollar’s side, the pair may soon overcome this barrier, potentially initiating a move towards 148.90. Further strength could lead to a rally towards 150.00.
Conversely, if sellers reappear and trigger a pullback, initial support can be found near the 100-day simple moving average around 147.40. If prices dip below this level, a retracement towards 146.00 and possibly even 145.30 cannot be ruled out.
USD/JPY TECHNICAL CHART
USD/JPY Chart Created Using TradingView
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GBP/USD TECHNICAL ANALYSIS
GBP/USD has spent recent weeks consolidating within a symmetrical triangle, a continuation pattern characterized by two converging trendlines: a rising one linking a series of higher lows and a falling one connecting a series of lower highs.
Symmetrical triangles are validated when prices push beyond the boundaries of geometric shape, with a stronger confirmation signal if the breakout aligns with broader trend in play.
For GBP/USD, traders should monitor two critical levels: resistance at 1.2750 and support at 1.2630. A breach of support may lead the bearish camp to target levels such as 1.2600, 1.2560, and 1.2455. Meanwhile, a breach of resistance could bring into focus 1.2830 and potentially 1.3000.