Intraday Forex Friday, January 7 (EURUSD, USDJPY, etc). Dollar headed for weekly gain, rides high on rate hike bets ahead of payrolls report.


Hi everyone. This observation is made around 06:50 UTC today, with 30 minutes time frames. The Resistance and Support Line were constructed according to Fibonacci retrenchment. Any discussion is welcomed.

The dollar is set for a broad weekly gains against most pairs and could extend its rally if U.S. labor data due on later today reinforces the case for early Federal Reserve interest rate hikes.
Fed rate-hike concerns and virus updates will be catalysts for the next currencies movement.

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  • The euro posted moderate gains against the dollar on Friday, traded at $1.13027, but en route for about 0.7% decline for the week.​
  • The rise in 10-year T-note yield to a 9-month high improving the dollar’s interest rate differentials.​
  • However, a weaker-than-expected U.S. economic data for weekly jobless claims and Dec ISM services weaken the greenback.​
  • Signs of inflation pressures in the Eurozone were hawkish for ECB policy and supportive for the euro. Eurozone Nov PPI rose 23.7% y/y, stronger than expectations of +23.2% y/y and the largest increase since the data series began in 1982. Also, German Dec CPI (EU harmonized) rose +0.3% m/m and+5.7% y/y, stronger than expectations of +0.2% m/m and+5.6% y/y. The inflation data pushed the 10-year German bund yield up to a 2-1/2-year high.​
  • Divergent central bank policies continue to dictate the currency movement. The Fed is currently tapering QE and may start to raise interest rates as soon as March, well before the ECB plans to tighten monetary policy.​
  • The EUR/USD seesawed around the daily range, ahead of the European session. The bullish case could gain strength if the pair breaks above 1.133-35, while bears will have better chances on a break below 1.127 or maybe at 1.1220, December monthly low.​
Important Levels to Watch for Today:​
  • Resistance line of 1.13329 and 1.13517.​
  • Support line of 1.12724 and 1.12537.​

  • The greenback advancing on the yen, which was at 115.933 per dollar, still in sight of Tuesday's five-year high of 116.342.​
  • The dollar is set to notch up a fifth consecutive weekly gain on the Japanese yen and looks poised to extend the rally if U.S. labour data due later today reinforces the case for early Federal Reserve interest rate hikes.​
  • Central bank divergence also was weighing on the yen. The yen has been the most prominent loser among major currencies, as traders reckon the Bank of Japan is likely to lag global interest rate hikes.​
  • Intraday bias in USD/JPY remains neutral for consolidation below 116.34 temporary top. Some consolidations could be seen but downside should be contained above 115.58.​
Important Levels to Watch for Today:​
  • Resistance line of 116.387 and 116.636.​
  • Support line of 115.580 and 115.330.​

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