Volatility is here to stay

The US Jobs Report surprised with very strong outcomes, beating all estimates with over 6SD, adding over 500K new jobs, while the Unemployment Rate ticked lower to 3.4% down from 3.5%, while the Average Hourly Earnings came in as expected at 0.3% while December’s data was revised higher to 0.4%.

Despite the strong data, it might be a result of seasonality adjustments, this is what has been happening almost every year for the past 10 years or more, which could lead to notable revisions in the coming months.

The US equities also managed to close Friday’s trading slightly lower after the opening gap due to the earnings reports of Google, Amazon, and Apple. Yet, the weekly close remained strong with a slight sign of reversal.

As for SPX, it managed to hold a higher lows pattern for six consecutive weeks, one we have not seen since November of 2021. Calling a reversal to the downside needs a clear signal, which would be a notable downward move below last week’s low at 4015.53. If this level is not touched, the upside trend is likely to resume at some point. Therefore, in the meantime, we maintain our bullish outlook towards 4250 and/or until February 16th, which is considered another key date for the recent upside cycle.

DXY bounce is finally here

The US Dollar Index spiked right after the data. It was a clear one-way trade to the upside, breaking multiple key resistance areas, reaching as high as 103.10 in early Asia today. In the meantime, the US Dollar Index upside move is likely to continue this week, eyeing 103.60 which represents its 50-DAY MA on the daily chart. Breaking over that resistance would clear the way for further gains ahead, towards 104.0 and 104.60s.

GBPUSD trade near our first target

As we noted in our previous report, we did short GBPUSD at 1.2210 before the US Jobs Report announcement. The pair declined all the way to 1.2030 in Asia today, and our trade has over 180 pips since the entry. Our 1st target remains at 1.20 followed by 1.19. Currently, it would be wise to move our stop loss to the entry price to protect the trade from any potential loss and will keep following over the next few days.

Time to short AUDUSD and NZDUSD

As for AUDUSD, it already broke multiple support areas on the daily chart and a trendline. The RSI Indicator is also below the 50 key level. Today in Asia the pair tried to retrace higher but still looked bearish. Therefore, we are shorting AUDUSD at the current level of 0.6935 with a stop loss at 0.71, while we are looking at 0.6725 as a first target over the next two weeks. The Reserve Bank of Australia’s decision in Asia tomorrow could be the catalyst of a bigger move.

As for NZDUSD, it is now up by 0.0810 pips within 81 days, with the same technical outlook as the Aussie. Therefore, we are shorting the pair at the current level of 0.6320 with a stop at 0.6490. On the downside view, we are looking for another leg lower towards 0.61 as a first target over the next two weeks.

 

 

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