Midweek Technical Analysis – USDJPY, EURUSD, USDCAD

EURUSD

For EURUSD, the pair struggled near its 20-day SMA and the 1.0435 level on Monday, renewing downside risks. Attention now shifts to the 1.0200 support area, a break of which could see a test near 1.0155, with parity becoming a possibility as well. On the upside, a rebound above 1.0400 won’t boost sentiment unless the pair clears the 1.0500-1.0540 area too.  

USDJPY

December’s nonfarm payrolls report due on Friday at 13:30 GMT could spark significant volatility as traders debate the timing of the next rate cut. Analysts expect a gain of 160k jobs, down from November’s 220k, with the unemployment rate holding steady at 4.2%. Average hourly earnings may ease slightly to 0.3% m/m but stay at 4.0% annually.

USDJPY has been struggling to close above 158.00 despite hitting a new six-month high of 158.54 earlier today. The technical signals reflect overbought conditions, with traders waiting for a clear break above the 158.63 barrier to target the next resistance at 160.20. An upbeat jobs report could provide a helping hand to the bulls.

Otherwise, if the jobs report disappoints, pressing the price below the support trendline at 157.30, the 20-day EMA could immediately come to the rescue near 156.15. If not, the next pivot point could occur within the 154.85-154.00 territory.  

USDCAD

In Canada, the focus will turn back to the data and particularly to Friday's employment figures due at 13:30 GMT following Trudeau's resignation.

Analysts expect a weak print, with job growth slowing to 25k in December from November’s 50.5k, while the unemployment rate could tick up to a three-year high of 6.9% from 6.8% previously. A disappointing report could seal a 25bps rate cut, pushing USDCAD toward the 4 ½ -year high of 1.4470 or even up to the 1.4500 round level. Then, the door could open for the 2020 and 2016 highs registered within the 1.4665-1.4689 zone.

If the data surprises to the upside, USDCAD may test the support level at the 20-day EMA around 1.4315, with the trendline at 1.4270 also providing a safety net. A close lower could lead to 1.4155.