The U.S. dollar weakened across the board since the market has been pricing in an increasingly dovish Federal Reserve. However, traders worry that the latest sell-off could be an overcorrection in the greenback. The U.S. jobs report came in better than expected, showing 263k jobs in November and a steady 3.7 percent unemployment rate.
This means that the jobs market remains tight, which is not something the Fed would like in its fight to bring inflation down. From a fundamental perspective, this week’s economic calendar is relatively light. Traders are looking toward next week’s central bank decisions for potential drivers.
Technical view - EUR/USD
The upward correction appears to be somewhat overstretched, with EUR/USD now testing the upper descending trendline of its primary downtrend. If the euro breaks above 1.0620, bulls may try to push it towards 1.07 and 1.0770 but given overbought price levels, a correction towards 1.0370 becomes more likely.
It's a similar picture in GBP/USD. The recent upward movement looks overstretched while entering a resistance zone between 1.2250 and 1.2650. Given the straight-lined upward movement, we anticipate pullbacks towards 1.2050-1.20.
EUR/USD
- Long at 1.0590
- Short at 1.0530
GBP/USD
- Long at 1.2330
- Short at 1.2270
DAX (GER40)
- Long at 14580
- Short at 14490
Settings for all trades today: Entries from 8:00 am UTC, SL 25, TP 40
Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumptions of MaiMarFX traders. They are not meant to be solicitations or recommendations to buy or sell a specific financial instrument.
