The US dollar is holding onto its gains, as bond yields remain elevated. Markets focus on the US jobs report for December, which could be negative. President Trump sent a calming message denouncing the Capitol chaos, potentially defusing tensions. Canada’s labor figures and Bitcoin’s ascent to near $40K are also eyed.
US Treasury yields have been extending their gains, trading near 1.10%. The move followed Democrats’ win of the Senate, which would enable passing massive stimulus and raising American debt. Details about President-elect Joe Biden’s economic plans are set to emerge.
The final Nonfarm Payrolls report of 2020 is set to show a modest gain of 71,000 jobs amid the winter wave of the virus. Indicators leading to the publication have been mixed, with ISM’s Purchasing Managers’ Indexes painting an upbeat picture while ADP’s private-sector figures falling short of estimates.
Canada releases its labor statistics at the same time and economists expect a loss of jobs and an increase in the Unemployment Rate. USD/CAD has been trading below 1.27 amid the rise in oil prices earlier this week. The black gold benefitted from Saudi Arabia’s unilateral production cut.
USD/CAD managed to get above the resistance at 1.2700 and is testing the next resistance level at 1.2720.
USD to CAD is currently testing the nearest resistance level at 1.2720. This resistance level has been tested during yesterday’s trading session and proved its strength.
A move above 1.2720 will open the way to the test of the next resistance level at 1.2750. In case USD to CAD manages to settle above this level, it will head towards the next resistance at the 20 EMA at 1.2775. In case USD to CAD gets above the 20 EMA, it will develop additional upside momentum and head towards the resistance at 1.2800.
On the support side, the nearest support level for USD to CAD is located at 1.2700. If USD to CAD moves below this level, it will decline towards the support level at 1.2665. A move below this level will push USD to CAD towards the next support which is located near the recent lows at 1.2625.
24-hour view: “Our expectation for EUR to ‘head higher to 1.2360’ was wrong as it plunged to 1.2243 after touching a high of 1.2345. The rapid decline appears to be running ahead of itself but there is scope for EUR to test 1.2225 first before the current weakness should stabilize. Resistance is at 1.2295 followed by 1.2320.”
Next 1-3 weeks: “The sudden sharp drop in EUR came as a surprise. While our ‘strong support’ level at 1.2240 is still intact (overnight low of 1.2243), upward momentum has dissipated. In other words, the positive phase in EUR that started earlier this week has come to an end (we were expecting a move to 1.2360). The current movement is viewed as the early stages of a consolidation and EUR is expected to trade between 1.2195 and 1.2350 for a period of time.”
Gold (XAU/USD) has bounced-off a dip to near the $1906 region, as the bulls attempt a tepid recovery above the 200-hourly moving average (HMA), currently at $1909.
Despite the pullback, gold’s path of least resistance appears to the downside, especially after the price confirmed a rising channel breakdown on the hourly chart in the Asian trades.
Bears eye a break below the critical $1900 level to accelerate the downside. Further south, the previous week low of $1869 could be tested.
Meanwhile, the bearish bias will remain intact so long as the price holds below powerful resistance aligned around $1913, which is the confluence of the bearish 21-HMA and the channel support now resistance.
The next line of defense for the bears is seen at the downward-sloping 50-HMA at $1920.
The Relative Strength Index (RSI) has witnessed an uptick in the last hour, although remains below the 50 level, supporting the case for lower levels.
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