Market update: US dollar looks to jobs data after Fed; setups on gold, EUR/USD, USD/JPY, GBP/USD

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The Fed kept interest rates steady in its latest meeting, hinting at a cautious future stance. The upcoming US jobs report gains significant importance, potentially impacting the US dollar, gold prices, and key currency pairs.

 

Source: Bloomberg

 

Forex Shares Commodities United States dollar Market trend Technical analysis

 Written by: Diego Colman | Market Analyst, New York | Publication date: Thursday 01 February 2024 04:56

The Federal Reserve on Wednesday concluded its first monetary policy meeting of the year, voting to maintain borrowing costs unchanged at their present 5.25% to 5.50% range, in a decision widely expected by market participants.

The FOMC also dropped its tightening bias, but signaled that it is not yet ready to ease its stance imminently. Powell went further during his post-meeting press conference, admitting that policymakers may not be confident enough to slash the cost of money at their next gathering.

With the likelihood of a March cut appearing slim at the moment, the US dollar may have room to rebound in the near term, but the recovery thesis depends on incoming information showing that the economy continues to perform well. In the absence of good data, a March move is still a possibility.

 

Source: CME Group

In the current context, the December US nonfarm payrolls report will take on added significance. In terms of estimates, US employers are forecast to have added 180,000 jobs last month, though the weakness in the ADP and several PMI surveys for the same period argue for a softer print.

Upcoming us jobs report

 

Source: DailyFX

If job growth surprises to the downside by a wide margin, a March rate cut could reenter the picture. This would exert downward pressure on treasury yields and the US dollar, but should support gold prices and other precious metals, including silver.

Conversely, if NFP numbers beat expectations and come on the strong side, we could see further unwinding of dovish bets on the Fed’s policy path - a bullish outcome for yields and the greenback. Gold, however, would not fare well in this scenario.

Gold price technical analysis

Gold inched higher on Wednesday but failed to clear resistance at $2,050, with prices pulling back after testing this area. It's too early to determine if this technical ceiling will hold, but in case it does, XAU/USD may retreat towards $2,005. On further weakness, a move towards $1,990 could materialize.

In contrast, if bulls regain decisive control of the market and manage to drive prices decisively above $2,050, buying momentum could gather pace, setting the stage for a possible rally towards $2,065. Above this pivotal level, all eyes will be on $2,065—the highs from late December.

Gold price daily chart

 

Source: TradingView

EUR/USD technical analysis

EUR/USD has declined sharply recently, guided lower by the upper boundary of a falling wedge—a bullish pattern. To confirm this technical setup, prices must take out resistance at 1.0870. Such a scenario could usher in a rally toward the 50-day simple moving average at 1.0920, with the next target at 1.0950.

Conversely, if EUR/USD deepens losses, initial support looms at 1.0780, followed by 1.0730, an important floor created by a long-term ascending trendline in play since September 2022. Vigilant defense of this zone by the bulls is imperative; any failure to protect this barrier may trigger a drop toward 1.0650.

EUR/USD daily chart

 

Source: TradingView

USD/JPY technical analysis

After a positive performance on Tuesday, USD/JPY changed course and slipped beneath the 100-day SMA at 147.40, signaling a bearish shift for the pair. If the retreat continues later this week, support is seen at 146.00. Below that, all eyes will be on the 50-day simple moving average.

On the other hand, if the bulls reemerge and trigger a meaningful rebound, the first technical barrier against further advances is located at 147.40. Beyond that, the next hurdle for the bullish camp will be trendline resistance at 148.00. Further up, the focus will be on 148.80.

USD/JPY daily chart

 

Source: TradingView

GBP/USD technical analysis

Over the past few weeks, GBP/USD has been consolidating within a symmetrical triangle- a continuation pattern composed of two converging trendlines: an ascending one connecting a sequence of higher highs and a descending one linking a series of lower lows.

The symmetrical triangle is validated once prices of the underlying asset move outside the boundaries of the geometric shape, with the confirmation signal carrying greater strength if the break happens in the direction of the broader trend.

In the case of GBP/USD, traders should watch two areas: resistance at 1.2750 and support at 1.2645. If support gives way, the bearish camp will likely focus on 1.2600, 1.2550 and 1.2455. On the flip side, if resistance is taken out, bulls may set their sights on 1.2830 and possibly even 1.3000.

GBP/USD daily chart

 

Source: TradingView

 

 

 

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