Down 0.42%, according to the US dollar index, Wednesday proved to be a turning point for the greenback last week. On the much awaited FOMC rate decision holding pat, dovish tweaks in the latest FOMC statement and Fed’s Chairman Powell position shifting to more of a dovish stance, the US dollar, engulfing Monday and Tuesday’s candles, explored lower ground and collided with fresh lows at 95.25.
The U.S. Bureau of Labor Statistics reported non-farm payrolls for January saw the US economy add 304,000 new jobs Friday, above the expected 165,000 and the second consecutive month above 300,000. The downside from the report came from the month-on-month average earnings increasing by just 0.1%, under the expected 0.3%, along with the unemployment rate ticking up 0.1% to 4.0%.
From a technical standpoint, the buck remains supported by a monthly supply-turned support area at 95.13-92.75. Visibly clearer on the daily timeframe, traders can observe the top edge of the monthly area offering clear support.
Meanwhile, in other currencies:
● The euro, up 0.42% against its US counterpart last week, staged a reasonably impressive run to the upside Wednesday, bolstered by an FOMC-induced USD selloff. The single currency went back to playing on the defensive Thursday, however, aggravated on ECB’s Weidmann comments regarding poor German growth figures and several years until ECB’s normalization. From a technical perspective, firm resistance is observed in EUR/USD this week. Resistance priced in from 1.1465 is seen on the weekly timeframe, with the daily timeframe bringing resistance at 1.1485 to the table.
● The British pound, down 0.93% vs. the dollar on the week, struggled to overcome Brexit uncertainty. Amid US trading hours Tuesday, the GBP/USD yielded ground as the pair
● Friday’s seasonally adjusted IHS Markit/CIPS purchasing managers’ Index (PMI) – which provides a single-figure tracker of the performance of the sector – fell to a three-month low of 52.8, down from 54.2 in December (Markit), consequently plunging the GBP/USD through steep H4 trend line support (extended from the low 1.2373).