Greenback Gains on Strong Jobs Data, Technical Levels Eyed

Greenback gained ground following a stronger-than-forecast October employment report. Payrolls increased by 165,000, well above the 65,000 consensus. The September figure was adjusted upward to 60,000 from 29,000, and the net revision over the past two months was +84,000. The jobless rate ticked down to 4.1% from 4.2%, even as the labor force participation rate inched higher.

Wage data also drew market attention. Average hourly earnings rose 0.4% on the month and 3.1% year-over-year, exceeding forecasts. Some underlying softness emerged: the U6 underemployment rate increased to 7.9% from 7.6%, as more people worked part-time for economic reasons. Still, the combination of stronger payrolls and firmer wages made a potential Federal Reserve rate hike in December more likely. The two-year US Treasury yield added 4.5 basis points to 4.52%. Meanwhile, USDJPY jumped 72 pips to 158.38 in the initial market reaction.

Is the dollar able to consolidate its advance?

The initial market response after payrolls can be rapid. The next focus is on whether prices can stay beyond the levels they have broken. For USDJPY, USDCHF and USDCAD, this means checking if buyers can keep prices above broken resistance. For EURUSD, GBPUSD and AUDUSD, it means checking if sellers can keep prices below broken support. If these breaks hold, traders have a level to lean on as they look toward the next targets. If prices slip back through the breakout levels, that is the first sign the post-payrolls move is losing steam.

EURUSD: The euro is trading beneath a swing zone of 1.1152 to 1.1160. Staying below would target the October lows.

USDJPY: The dollar-yen pair is moving back toward its 200-day moving average of 158.60. To give buyers more control, the rate needs to get and stay above that moving average. Attempts to run back to the September levels have seen buyers give way to sellers. The price has moved above the 200-hour (157.93) and 100-hour (158.104) moving averages, making those levels a risk point.

GBPUSD: The pound dropped away from the 100-day and 200-hour moving averages at 1.3392. Staying below keeps sellers in charge. The next target is the breached 38.2% retracement level at 1.3342.

USDCHF: The dollar-franc pair is trading higher and testing the 200-hour moving average and the broken 38.2% retracement near 0.8224. A move above would be more bullish. Staying below leaves the pair in the vicinity of the 100-hour moving average at 0.8172.

USDCAD: The loonie is absorbing contrasting employment data: a stronger US report and a weaker Canadian one. That has pushed the pair higher into a swing zone between 1.4129 and 1.4153.

AUDUSD: The Australian dollar is testing the lower boundary of a key swing area dating back to January. That area spans 0.6832 to 0.6863.