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EUR Extending Post-ECB Rally, Nearing Congestion Resistance

FOREX
  • EUR strength has persisted into a second session, with EUR/USD making further progress after topping the 100-dma of 1.1429 after yesterday's hawkish ECB press conference. This puts the pair just shy of congestion resistance layered between 1.1483 up to 1.1500, which could slow progress from here. EUR/GBP is similarly higher, extending the recovery off the multi-year low printed yesterday at 0.8285. This puts markets on track to test 0.8480 - the 61.8% retracement of the December - February downleg.
  • Commodity-tied currencies are trading more poorly, with AUD and CAD among the session's worst performers. This retains the 50-dma in AUD/USD at 0.7164 as key resistance, which has contained rallies so far. The keeps the trend condition bearish and the recent bounce is considered corrective. The recent breach of key support at 0.6993/91, the Dec 3 2021 and Nov 2 2020 lows reinforced a bearish theme and confirmed a resumption of the downtrend and has opened 0.6963/21, the Jul 16 and Jul 14 2020 lows.
  • Nonfarm payrolls takes focus going forward, with markets expecting job gains to slow to +125k in January vs. December's +199k. Nonetheless, there remains a wide range of estimates with a considerable tail skewed toward a negative reading, with a number of analysts looking for a reading as low as -250k.
  • Canadian jobs data is also due, with the unemployment rate seen rising to 6.3% from 6.0% previously. A number of central bank speakers are also due, with BoE's Pill and Broadbent due as well as ECB's Villeroy.
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