Weekly Analysis: First Trading Week of 2018 – US Jobs Data in the Spotlight
Weekly Analysis: The US Dollar ended the year on a bearish note, weakening for the entire last week against the Euro. The pair finished 2017 right on the key resistance at 1.2000 but it is unclear yet if we are dealing with a true break.
After breaking the bearish trend line seen on the Daily chart above, the pair continued higher and breached the important barrier at 1.2000. The short term momentum is bullish but price action will be affected by low volumes during the early days of the coming week and this means that we may see either another period of strong movement or tight ranges. The Relative Strength Index is approaching overbought and 1.2000 is a key level, so the probability of a bounce lower from here is high.
Monday is the first day of the New Year, so most banks across the globe will be closed and no economic data will come out. Tuesday is again a slow day, without major indicators and action finally picks up Wednesday with the U.S. Manufacturing PMI and the FOMC Meeting Minutes, which will offer details about the latest FOMC rate decision and reasons that determined it.
Thursday we take a first look at US employment data with the release of the ADP Non-farm Employment Change, which is a report that shows changes in the total number of employed people, apart from the farming sector and Government.
The last release of the week but the most important is scheduled Friday: the Non-Farm Payrolls, which is the main gauge of employment in the United States. The report shows changes in the total number of employed people during the previous month, excluding the farming industry and usually has a high impact on the US Dollar.
US Dollar weakness was seen across the board last week and the pair finished the year very close to 1.3500, on a bullish note.
For this week we expect choppy price action, with the pair trapped between 1.3450 support and 1.3550 resistance. Monday the market will come to a stop due to New Year’s Day but action will pick up later in the week when the U.S. employment data will come out. A break outside the range we’ve just mentioned will probably be determined by the economic data released throughout the week.
Monday British banks will be closed, celebrating New Year’s Day and the rest of the week will be relatively slow, with only three surveys of purchasing managers. Tuesday the Manufacturing PMI will be released, followed Wednesday by the Construction PMI and Thursday by the Services PMI. These surveys show the opinions of purchasing managers from the respective sectors about business conditions in that sector but the impact is usually medium.
We wish you a Happy New Year!
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.