Intraday Market Analysis – USD Struggles For Support

EURUSD tests key resistance

The US dollar retreated after December’s nonfarm payrolls came in far below expectations. The pair has been in a narrowing range between 1.1270 and 1.1365.

The previous fall below 1.1280 added pressure on the buy side, though it turned out to be an opportunity for the bulls to accumulate at a bargain.

A break above the resistance could end the sideways action and trigger a runaway rally towards 1.1460. The RSI surged into the overbought area and may cause a brief pullback above 1.1295.

USDCAD tests daily support

The loonie rallied after Canada added twice as many jobs as expected in December. The year-end sell-off met strong bids near the daily support at 1.2620.

But the rebound came to halt at the supply zone around 1.2810, which used to be a support from the previous consolidation. The RSI’s double top in the overbought zone has restrained the upward momentum.

1.2730 is a fresh resistance as price action is about to retest the critical level at 1.2620. A bearish breakout could trigger a plunge to 1.2540.

GER 40 seeks support

The Dax 40 edged lower as rising CPI in the eurozone argues in favor of tightening. The index saw stiff selling pressure right under the all-time high at 16300.

A bearish RSI divergence in this major supply area indicates a lack of commitment from the bulls as buying slows down. A combination of profit-taking and fresh selling has led to a drop below 16100, a warning sign for a steeper correction.

15800 is the next key support. A breakout could send the index to 15500 at the base of the latest rally.