The dollar slipped slightly against the yen following the mix of data, where jobless claims were slightly lower, and productivity was much weaker than forecasts. USDJPY dipped to 109.45 from over 109.75, while EURUSD was steady near 1.2450. The USDJPY, broke the 200-period EMA a in the hourly chart, and it is currently trying to cross down to the lower bollinger Bands pattern. The pair has retrace more than 60% of the gains seen today.
Significant is the fact that we are facing today, a consolidation of the pair, between 38.2 – 50.0 Fibonacci retracement, seen since January 22. Therefore, on the downside, if price continues southwards, breaking and holding below the 38.2 Fibonacci level and the 20-period MA, at 109.30, then is likely to see a retest of the support area 109.15 and 109.00, which is also the confluence of 23.6 Fib. level and the 20-period in the 4-hour chart.
On the upside, if price holds above 109.30 and moves upwards, breaking the strong resistance seen the 6-Days, at the 50.0 Fibonacci level at 109.75 , then the next resistances area is up to 61.8 Fibonacci , at 110.10-110.40.
The 1k U.S. initial claims drop to a lean 230k in the first “post holiday” week of January trimmed the 15k bounce to 231k (was 233k) in the MLK week from the 45-year low of 216k in the BLS survey week, versus a 15-week high of 261k in the week of both New Year’s and the “bomb cyclone.” Holiday gyrations are presumably now behind us, and claimshave established a tight trajectory into Q1 with disaster rebuilding and a boost from tax reform. Claims are averaging a lean 234k thus far in January, versus 242k averages in both November and December, a cycle-low 233k in October, and a hurricane-lifted 269k in September. The 216k BLS survey week reading undershot recent survey week readings of 245k in December, 240k in November and 223k in October, versus a hurricane-lifted 260k in September. Our 200k January nonfarm payroll estimate faces upside risk from robust consumer, producer, and small business confidence, a big 234k ADP rise in January after solid 213 average rise in 2017, and a tightening in claims. Vehicle sales bounced 2% to a 17.8 mln rate in December, though we expect a 3% January drop, and we expect the assembly rate to climb to the 11.2 mln average in Q1 from an 11.1 mln pace in December.
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