The U.S dollar continued to extend its gains against the Euro during last weeks trading session to make a fresh low at 1.1750 but later eased off some gains after Job reports from the U.S economy was published on Friday. The result indicated that the Federal Reserve could keep rates on hold for longer, prompting investors to book profits in the greenback.
The U.S. economy added 252,000 jobs in December the Labor Department said, more than the 240,000 forecast by economists. The unemployment rate ticked down to a six-and-a-half year low 5.6% from 5.8% in November. Economists had forecast a decline to 5.7%.
However, the report showed that average earnings fell by 0.2% in December, missing expectations for a 0.2% increase and were up by only 1.7% from a year earlier.The drop in average earnings prompted investors to take profits in the dollar, as markets pushed back expectations for the first hike in U.S. interest rates to late-2015 from mid-2015 before the report.
This weakened the dollar slightly against most currencies on board and the U.S dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.39% to 92.18 late Friday, off the 12-year peaks of 92.76.
Initial weekly bias remains slightly on the upside as there might be some consolidation in the pair, so we might see some short rally to 1.19600 psychological zone which also happens to be around the 55 Exponential Moving Average on the 4 hours time-frame, as the market seems to be over-sold. However, the bigger picture still indicates the bearish trend is still intact so we will be looking to sell the rips whenever price gets to any important supply zone or resistance.
Below 1.1750 will target 100% projection of 1.3700 to 1.2500 from 1.2886 at 1.1686 next.
In the week ahead, the economic calendar is light, but markets will be looking ahead to Wednesday’s report on U.S. retail sales, as well as Friday’s data on U.S. Consumer Price Index and consumer sentiment.