The U.S dollar continued to extend its gains against the Great Britain Pound during last weeks trading session to make a fresh low at 1.50332 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.
Moreover the Great Britain Pound continue to remain under pressure after consecutive worsening data kept coming in from production, construction and service activities.
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 1.52600 or 1.53000 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 as 21 and 55 EMA are still crossed towards the downside, so we will be looking to sell the rips whenever price gets to any important supply zone or resistance.
Below 1.5033 should extend recent decline through 1.5 psychological level to next key support at 1.4813.
In the week ahead, the economic calendar is light, but markets will be looking ahead to Tuesdays GBP Consumer Price Index and Wednesday’s report on U.S. retail sales, as well as Friday’s data on U.S. Consumer Price Index and consumer sentiment.