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USDOLLAR Breakout Attempt Fizzles Despite Upbeat NFP Report

USDOLLAR Breakout Attempt Fizzles Despite Upbeat NFP Report

David Song,

Talking Points:

- USDOLLAR Fails to Breakout Despite Upbeat NFP Report; Retail Sales in Focus.

- GBP/USD RSI Pushes Deeper Into Oversold; Another 8-1 Split at the Bank of England (BoE)?

- AUD/USD Continues to Carve Bearish Pattern Ahead of Australia Employment Report..

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12204.2612223.0912168.620.26136.51%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Even though the Dow Jones-FXCM U.S. Dollar clears the November high (12,219) following the 292K expansion in Non-Farm Payrolls (NFP), another failed attempt to produce a higher closing price may continue to produce range-bound prices as U.S. wage growth disappoints.
  • With U.S. Advance Retail Sales anticipated to show a slowdown in household spending, a dismal consumption report may drag on interest rate expectations as it remains one of the leading drivers of growth and inflation.
  • Will keep a close eye on the topside targets around 12,162 (April high) to 12,176 (78.6% expansion) as the USDOLLAR appears to be coiling for a move higher but, a larger pullback may spur a move back towards near-term support around 12,049 (78.6% retracement) to 12,082 (61.8% expansion).

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GBP/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • With GBP/USD coming up against channel support, the pair may consolidate going into the Bank of England (BoE) amid the ongoing 8-1 split within the Monetary Policy Committee (MPC) but, the pair stands at risk for a further decline especially as the Relative Strength Index (RSI) pushes deeper into oversold territory.
  • Even though the BoE continues to prepare U.K. households and businesses for higher borrowing-costs, more of the same from the central bank may further dampen the appeal of the sterling as Governor Mark Carney appears to be in no rush to normalize monetary policy.
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long GBP/USD since November 19, but the ratio holds near recent extremes as it sits at +2.81 as 74% of traders are long.

Join DailyFX on Demand for Real-Time SSI Updates Across the Majors!


AUD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the 0.4% expansion in Australia Retail Sales, AUD/USD may continue to give back the rebound from the September low (0.6906) as the pair carves a series of lower highs and low to kick off 2016.
  • With Australia Employment anticipated to contract 10.0K in December, a marked decline in job growth may spur increased headwinds for the higher-yielding currency as it puts increased pressure on the Reserve Bank of Australia (RBA) to further embark on its easing cycle.
  • Downside targets remain in focus as the RSI flirts with oversold territory, with the 2015 low (0.6906) in focus, following by 0.6860 (61.8% expansion).

Read More:

Price & Time: S&P 500 Shakeout of Shakedown?

EUR/USD Short-Term Strategy: Sell Rips Sub-1.0880

Bearish NZDUSD As Double-Topping Pattern Develops on Divergence Into 200-DMA

Trading Opportunities of 2016: Key Currency Crosses to Watch amid the Diverging Paths for Monetary Policy

Avoid the pitfalls of trading by steering clear of classic mistakes. Review these principles in the "Traits of Successful Traders" series.

--- Written by David Song, Currency Analyst

To contact David, e-mail Follow me on Twitter at @DavidJSong.

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