US dollar was higher but backs off as the market reevaluates the US jobs data

The initial reaction in the US dollar was to the upside after non-farm payroll rose by 216 K versus 170K expected. However, looking at previous two months of revisions, the number may not be as strong. Those revisions showed a decline of -71K. The October number was revised down -45K from 150K to 105K. November with revised from 199K to 173K (-26K).

The unemployment rate remains solid at 3.7% versus 3.8%. The participation rate did decline which contributed to that decline. That level moved from 62.8% to 62.5%. That is a big month on month decline. HMMMM. Earnings were higher than expectations which runs counter to the ADP trends found in their report yesterday.

Initial reaction in the US dollar was to the upside, but that is being reversed on second thoughts.

USDJPY: The USDJPY moved to a high of 145.971 just short of the 146.00 level and the midpoint of the move down from the November high at 146.075 and the last swing high from December 13 at 145.952. Sellers leaned against those levels.

Since peaking, the price has rotated back to the downside and currently trades near 145.50. The price was trading at 145.113 just prior to the report. The low price – post the report – reached 145.3674. That was near the highs from the Asian/European sessions (see chart below).

Moving below that level and the 50% midpoint of the day trading range at 145.319 would have traders looking toward the 100 bar moving average on the 5-minute chart near 145.14. So far, the buyers are leaning against those old highs as traders hope for a bounce back higher.

EURUSD:The EURUSD moved down to test the lower swing area on the hourly chart between 1.0878 and 1.0894. The low price reached just below the level of that swing area at 1.08763. The price has since retraced all the declines. In the process, the price is back-testing the 50% midpoint of the move up from the December low (see chart below). The level comes in at 1.0931. The high price – post the US jobs report – reached 1.092804. Getting above the 50% retracement level and then the 1.0942 level (the longer-term 50% midpoint on the daily chart from the 2020 high) would encourage more buying toward the 100-hour moving average at 1.09613.

UPDATE: The price just broke above the 50% midpoint and looks toward the 1.0942 level (50% of the trading range since 2020 high).

GBPUSD: The GBPUSD moved lower off of the report but did find support buyers near the swing area outlined in the pre-release video between 1.2602 and 1.26137. The low price reached 1.26106 before bouncing back higher. The rebound is trading above and below the 50% of the move up from the December low at 1.26629, but remains below the falling 100-hour moving average at 1.2675. It would take a move above the 100-hour moving average with momentum, to increase the bullish bias.

This article was written by Greg Michalowski at Source