The US dollar, as measured by the DXY index, surged following the release of strong U.S. labor market data, with 353,000 jobs added in January – almost double what Wall Street had expected. The positive momentum in the labor market may delay the onset of the Fed’s easing cycle and temper the number of rate cuts once the process commences. This article examines the technical outlook for three major currency pairs: EUR/USD, USD/JPY, and AUD/USD, shedding light on the potential support and resistance levels that forex traders need to monitor going forward.
With solid job creation and robust wage growth, the U.S. economy seems to be holding up well and might have gained momentum at the start of the new year. This situation could postpone the Fed’s easing cycle, limiting rate cuts as a result, and creating a constructive environment for the U.S. dollar. As a result, U.S. Treasury yields are expected to push higher in the coming days and weeks. Against this background, the technical outlook for the EUR/USD, USD/JPY, and AUD/USD pairs is analyzed, providing essential information for forex traders as they navigate the upcoming trading sessions.
The technical analysis for EUR/USD showed that the currency pair almost broke the upper boundary of a falling wedge and reversed lower following strong U.S. labor market data. If prices fail to hold above 1.0780, a drop towards 1.0730 and 1.0650 is possible. Conversely, a bullish turnaround could see prices moving beyond 1.0860 and heading towards the 50-day simple moving average at 1.0915. A similar analysis for USD/JPY and AUD/USD highlights potential support and resistance levels, providing a comprehensive view of the technical outlook for these major currency pairs.