Dollar Double Boosted by NFP and Trade Balance

Dollar soars in early US session after Non-Farm Payroll and Trade Balance reports. Feb NFP shows the US economy added 97k jobs, which is close to expectation of 100k. However, Jan’s number was sharply revised up from 111k to 146k. Also, unemployment rate dropped from 4.6% to 4.5%. Average earnings rose 0.4% mom, higher than expectation of 0.3%. Overall the job report is more solid than expected. On the other hand, trade deficit narrowed more than expected to $59.1b, slightly better than expectation of $59.7b and back to below $60b level. Exports increased $1.4b to $126.7b while imports decreased $1.0b to $185.8b.

Dollar surges against euro, yen and swiss franc. Technically speaking, near term resistance against yen and swissy were broken, confirming the carry trade unwinding decline has completed, at least in short term, and more dollar strength should be seen. Meanwhile, not that weakness in yen and swissy has kept Sterling relatively stable as it’s supported in strong GBP/JPY and GBP/CHF rally.


Daily Pivots: (S1) 115.98; (P) 116.72; (R1) 117.90;


USD/JPY’s rally from 115.13 extends further to as high as 118.33 on broad based dollar strength and yen weakness. Firm break of mentioned 117.80 cluster resistance (38.2% retracement of 122.17 to 115.13 at 117.82) indicates that fall from 122.17 should have already completed at 115.13 and at this point, stronger rebound should be seen towards 61.8% retracement of 122.17 to 155.13 at 119.48. Touching of 117.17 will turned intraday outlook consolidative first.

In the bigger picture, previous break of mentioned medium term rising channel support (108.99, 114.41, 117.87, lower channel at 116.78 now) indicates that the whole medium term up trend form 108.99 has already completed at 122.17. With the corrective nature of the rise from 108.99, this will swing favors back to the case that such medium term rally is merely part of a large scale consolidation that started at 121.38, with first leg completed at 108.99 and second leg completed at 122.17. The current fall should then represent the third leg of such consolidation and deeper decline should at least be seen to below 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02) first.and probably further to 108.99 (06 low).

Having said that, even though the current rebound from 115.13 is stronger than originally expected, we’d still expect another fall to follow after finishing the current rebound. However, a drop below 115.13 low or clear short term reversal pattern is needed to be seen first. Otherwise, the current rebound could still extend further.

USD/JPY 4 Hours Chart - Forex Newsletters, Forex Outlook, Forex Review, Forex Signal

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Shing-Ip Tsui is the founder and CEO of ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.