What Friday’s jobs report means to the USD

The dollar collapsed on Friday on news that non-farm payrolls rose only 121,000 jobs in June. The gains in payrolls for May were revised upward to 92,000 (from 75,000) and April’s were revised downward to 112,000 (from 126,000). The market was pricing in an increase of 200,000 — there goes the significance of the ADP employment report that boosted the buck a couple of days earlier…After a mild recovery, the dollar should fall further.

The euro/dollar rallied to a one-month high of 1.2862 on Friday, in line with the bullish reversal on the weekly charts in the previous week. The pair’s decline on Wednesday didn’t last long and following a transitional recovery on Thursday it blasted higher on Friday. It trimmed gains late on the day

Above this Fibonacci retracement level at 1.2785, resistance now comes at 1.2850 and 1.2919.

Initial support is at 1.2725. Next support lies at 1.2670 from a Fibonacci retracement level.

Oscillators are mixed.

NEAR-TERM: Mixed with a bearish bias
LONG-TERM: Bullish

Dollar/yen fell to a one-month low of 113.80 on Friday, in line with the bearish reversal formed the previous week. The pair is facing a possible head-and-shoulders formation targeting 111.35, but that was not confirmed by a close below the neckline at 113.88.

The key level is a 50-point pivot at 114.20, which targets 113.70 and 114.70.

The pair has support at 113.78 from the 31.8% Fibonacci retracement level of the uptrend between May 17 and June 27 and of course 113.70. Intermediate support is at 112.90 from another 50-point pivot, which targets 113.40 and 112.40.

Above 114.70, strong resistance remains at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00. Next level is 116.58.

Oscillators are mixed.

NEAR-TERM: Mixed with bullish bias
LONG-TERM: Bearish

Sterling/dollar traded basically between 1.8350 and 1.8480 for most of last week, so the close on Friday above 1.8480, when it rallied to a one-month high of 1.8538, is a bit of a big deal. Following some minor pull back, cable could see more strength.

Good resistance comes at 1.8558 and a close above this level would suggest an accelerated
up move to 1.8670. There is a bullish flag unfolding right now and its target is 1.8700.

Below 1.8480, the pound has support at 1.8445 from a Fibonacci retracement level.

Oscillators are mixed.

NEAR-TERM: Mixed with a bearish bias
LONG-TERM: Bullish

Dollar/Swiss franc
Dollar/Swiss franc sank to one-month low of 1.2182 on Friday and stopped on the brink of a head-and-shoulders formation targeting 1.1880.

If this level gives way support is then pegged at 1.2150 from a short-term Fibonacci retracement level. Next good level comes at 1.2075.

Above 1.2295, resistance is now seen at 1.2320 and then at 1.2375.

Oscillators are mixed.

LONG-TERM: Bearish

Monday, July 10, 2006 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT
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