The Euro remains firmly in red on Friday and extends weakness after Thursday’s long-legged Doji signaled bears were pausing.
The pair is on track for the worst week since early November as dollar benefited from recent geopolitical turmoil in both ways, as safe-haven and riskier asset.
Better than expected US non-manufacturing ISM data and upbeat ADP private employment report, added to dollar’s positive stance.
Euro’s daily techs are in bearish setup and favor further weakness after the action of past two days generated strong bearish signals on break below 200DMA and two Fibo levels (38.2% and 50% of 1.0981/1.1239), opening way towards next key levels at 1.1079 (Fibo 61.8%) and 1.1063 (daily cloud top).
US jobs report for December is the key event today with 164K new jobs expected to be created in Dec against strong rise in Nov (266K); average earnings are also expected to rise on monthly basis (0.3% f/c vs 0.2% previous), while unemployment rate is expected to remain near record lows.
Despite NFP expectations being significantly below previous month’s very strong results, the US labor sector remains firm and expected to support the longest US economy expansion in the history.
Another supportive factor was release of US ADP jobs data, often used as an indication for NFP report, which rose well above expectations (Dec 202K) while previous month’s figure was nearly doubled after the revision.
Strong US jobs numbers could further deflate the Euro and risk drop through relatively thin daily cloud (spanned between 1.1063 and 1.1029).
On the other side, traders remain cautious on possible disappointing results of US jobs report and possible dollar’s correction after strong rally in past seven days, which could spark ‘buy the rumors – sell the facts’ scenario.
The single currency faces initial resistances at 1.1113/20 (30DMA / Thursday’s high) ahead of more significant 1.1140 zone (broken bull-trendline / 200DMA / Fibo 38.2%), close above which would sideline bears.
Res: 1.1113; 1.1140; 1.1157; 1.1178
Sup: 1.1091; 1.1079; 1.1063; 1.1029