The US dollar is strengthening on strong economic data and hawkish Fed expectations. Major currencies like EUR, AUD, and CAD are facing headwinds from the dollar’s strength; reflecting weaker economic outlooks and potential for delayed rate cuts.. Key economic data releases this week will be crucial for the near-term direction of major currencies.


Euro Weakens Against Dollar as US Economy Booms

  • Euro falls to two-month low: The euro dropped below 1.08 against the dollar due to a strong US economy and expectations of delayed rate cuts by the Federal Reserve.
  • Red-hot US jobs report: The US added a staggering 353,000 jobs in January, far exceeding forecasts and boosting the dollar.
  • Fed rate cuts on hold: Hopes for a March rate cut by the Fed faded after the jobs data, pushing investors towards the dollar.
  • Eurozone struggles: Eurozone PMIs point to contraction, indicating a weaker economy compared to the US.
  • ECB cautious on rate cuts: Despite falling inflation, the ECB remains concerned about upside risks and may delay rate cuts.


Australian Dollar Slides on US Dollar Strength

  • Aussie falls to lowest level since mid-November: The Australian dollar weakened against the greenback after the US jobs report.
  • RBA expected to hold rates: The Reserve Bank of Australia is likely to keep rates steady despite falling inflation and retail sales.
  • Rate cut bets pushed back: Markets now expect the RBA to wait until later this year to cut rates.


Canadian Dollar Awaits US Jobs Data

  • Canadian dollar stable before key US data: The Canadian dollar awaits the US nonfarm payrolls report for direction.
  • Strong US data could delay BoC rate cuts: A robust US economy could reduce pressure on the Bank of Canada to lower rates.
  • BoC likely to follow the Fed: The BoC is expected to cut rates after the Fed does so.


Japanese Yen Extends Losses After US Jobs Data

  • Yen weakens further against the dollar: The yen fell after the US jobs report, extending its recent losses.
  • BoJ eyes exit from negative rates: Strong economic data in Japan could prompt the Bank of Japan to end its ultra-loose monetary policy.
  • Policy shift could lift the yen: A change in BoJ policy would likely strengthen the Japanese currency.


Key Upcoming Events:

  • Japan: Wage growth and household spending data (February 6)
  • Australia: RBA monetary policy meeting (February 6)
  • US: Nonfarm payrolls report (February 2)


Technical Analysis:

  • EUR/USD: Faces resistance at 1.0822 and 1.0864, with support at 1.0747 and 1.0705.
  • AUD/USD: Faces resistance at 0.6541 and 0.6581, with support at 0.6473 and 0.6433.
  • USD/CAD: Faces resistance at 1.3400 and 1.3467, with support at 1.3349 and 1.3310.
  • USD/JPY: Faces resistance at 149.22 and 150.08, with support at 147.73 and 146.87.

Other Markets

  • Oil (USCrude): Downward after breaking support at $74.22-$73.72.
  • Gold (XAUUSD): Downward after testing resistance at $2070-$2064.
  • Bitcoin (BTCUSD): Buy at $42642.65 for potential rise to $45000.
  • Ripple (XRPUSD): Buy at $0.498 for potential rise to $0.548.
  • Ethereum (ETHUSD): Buy at $2287.75 for potential rise to $2435.
Categories: Market News

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