Dollar dips after jobs data

The dollar has undergone a correction over the weekend in the wake of the stellar non-farm payrolls figure.

Pound and dollar
Source: Bloomberg

Euro edges higher

The euro is creeping higher this morning as the greenback gives up some of the gains that were accrued on the back of the non-farm payrolls on Friday. As I previously stated, the headline figure easily exceeded the estimates, and an interest rate rise from the US this year cannot be ruled out. EUR/USD is likely to encounter little volatility this week as Greece is off the radar for now, and there is little in the way of economic announcements from the eurozone to get traders excited.

The currency pair has been gaining ground since March but the strong US jobs report will curtail any future gains, and next week’s Federal Reserve meeting will be the highlight of the fortnight. A rate rise next week is unlikely, but the commentary will provide a clue as to a possible September hike.

The $1.12 level is acting as resistance and if it is cleared $1.14 will be the next barrier to a rising EUR/USD. The $1.11 mark has already been punctured overnight, and a move through it again will bring the support at $1.10 into play.

EUR/USD chart

Pound pushes higher

GBP/USD is making the most of the soft dollar but the gains it has made are relatively small in comparison to the severe decline it suffered on Friday. The latest non-farm payrolls number has thrown a spanner in the works when it comes to US interest rate decisions, and just as traders were starting to look to 2016 for the Fed’s first rate hike, an impressive set of numbers has reignited rumours of a rate rise this year.

As I stated last week, the US is still leading the interest rate race, and given the strong jobs data a renewal of dollar dominance is on the cards.

The downside target is $1.52, and if that mark is taken out the support at $1.50 will be brought into play. The $1.53 level is acting as resistance, and if that mark is exceeded then $1.55 will be on the radar. 

GBP/USD chart

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