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Currency Trading Weekly Forecast and World Economical Data.


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Forex Forum, World economy, and currency trading weekly analysis.​

Currency trading weekly analysis

Job growth in the U.S. slowed significantly last month with non-farm payrolls rising by only 210K in November, down from 546K in October. This was less than half of the 550K consensus forecast. The U.S. dollar sold off when the numbers came out but recovered quickly for 3 reasons:

1) First, the unemployment rate dropped to 4.2% to its lowest level since the pandemic. Economists had been looking for a more modest improvement but the uptick in the participation rate tells us that this was not a reflection of workers dropping out of the labor force.

2) In total, the U.S. economy has recovered more than 80% of the jobs lost since the pandemic.

3) Federal Reserve rate hike expectations remained intact with the futures market pricing in 25bp hike in June and 50bp hike in November.

On the other hand, On Friday morning, the upper trend line of the channel down pattern and the 100-hour simple moving average failed to provide resistance to the USD/JPY currency exchange rate. Namely, the pair surged above them and touched the 113.50 mark, before retracing to look for support in the 100-hour SMA.​

A resumption of the surge of the USD/JPY pair might first test the resistance of the 113.50 level. Above the 113.50 mark, this week's high levels at 113.88/113.97, the 200-hour SMA near 114.00, the 114.00 mark by itself an the weekly simple pivot point at 114.01 make up a major cluster of resistance.

Elsewhere, Yesterday EUR/USD has been losing traction over the second half of the week, with the price falling back into the 61.8% Fibonacci support level of $1.1283.​

The recent struggles to break through $1.1374 highlights the importance of this inverse head and shoulders neckline. A break back below the $1.1235 swing-low would bring about expectations of another bearish breakdown from here. Until then, a bullish turn would likely bring another challenge of the all-important $1.1374 neckline.

GBP weekly forecast

On the other hand, The British pound declined against the euro as data showed an increase in the number of Covid-19 cases in the UK.​

According to the Office of National Statistics (ONS), the proportion of people who tested positive for the virus rose to 1.65% of the population last week. Most of the cases are of the Delta variant. Therefore, there are worries that the Omicron variant will lead to more infections. The currency also declined after the relatively weak UK services PMI numbers. According to Markit, the country's services and composite PMI declined to 55.9 and 58.5, respectively. These numbers could push the BOE to be relatively dovish later this month.

The USDCAD pair declined after the latest jobs numbers from the United States and Canada. The data showed that the labour market in both countries continued doing well in November. In the United States, the economy added more than 210k jobs in November. The bureau also revised upwards the previous reading from 531k to 546k. The US unemployment rate declined to 4.2% while the participation rate rose to 61.7%. Meanwhile, in Canada, the economy added more than 153k jobs in November while the unemployment rate fell to 6.0%. Still, the biggest challenge for the two countries is that the current Covid wave could disrupt the recovery.

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