Fundamental Analysis:

The U.S dollar fell against the Japanese Yen on Friday after the latest U.S. jobs report showed that average earnings fell last month, suggesting that the Federal Reserve could keep rates on hold for longer.

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 also showed that average earnings fell by 0.2% in December, missing expectations for a 0.2% increase and were up by just 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.



Technical Analysis:

Initial bias in the week remains on the downside as long as 121.831 resistance holds, with 21 and 55 EMA still crossed downward on the 4 hours time frame. The fall from 120.82 is viewed as the third leg and would extend lower this week. But we’d expect strong support from 38.2% retracement of 105.19 to 121.84 at 115.51 to contain downside and bring rebound. Meanwhile, break of 121.83 resistance will confirm up trend resumption.


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 consumer sentiment and Consumer Price Index.


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