We expect a USD rally, but will the rally hold? | RJO Futures

February 3, 2017 8:52AM CST

March Dollar:  The USD this morning continues to benefit from the reversal action off the low in the prior session but it is also benefiting from somewhat soft Chinese and European readings.  It is also likely that the currency trade generally expects US non-farm payrolls to be strong enough to leave the growth mantra in place.  However, the dollar has seemingly entrenched itself in a downward trend since the January highs and it could take a top of the range gain in payrolls to effectively throw off that negative bias.  While we think the number will be above 154,000 and that will cause an initial rally we are highly doubtful the dollar will sustain that pulse up move into next week.  Downside resistance at 10061.

Dollar Index Daily Chart

 

March Euro:    With European services and composite readings countervailing each other overnight the decline in Euro-zone retail sales leaves the net fundamental tilt in the bear camp to start today.  It goes without saying that noted recovery action in the dollar from the lows yesterday leaves the euro under a negative technical analysis bias.  As suggested in the dollar coverage we suspect that US payrolls will be “good enough” to leave the euro in a downward track.  Downside target is seen at 10715.  To negate this downward momentum we will need to see prices above 10800 today.

Euro Index Daily Chart

 

March Yen: The Yen appears to be coiling at the end of this week for a critical decision.  While the market gas maintained a well-defined upward trend since the mid-December low, we are suspect that this pattern will continue through today.  Support comes in at 8744 today, there would seem to be room for a washout without altering bigger picture trends.  Resistance comes in at 8930-8940, and then 9042.

Yen Daily Chart

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