The “King Dollar” rallied for the end of the previous week’s trading as NFP (Non-Farm Payrolls) in the United States showed a massive 295K vs. 235K release and after that, nothing really mattered anymore.
GBPUSD, or cable as it is also called, dropped a stunning two hundred pips on Friday and is now flirting with the 1.50 level which stood as a line in the sand! The last time the pair was here it jumped on the base of a double bottom.
EURUSD is making history as well as it is sitting at twelve-year lows, closing the week well below the 1.10 mark. The reasons for EURUSD being hit were twofold: one is related to the fact that that the ECB (European Central Bank) announced it will start to buy bonds effectively on March the 9th and the other with, of course, the better than expected US jobs data.
USDCHF traded well above the 0.98 handle and this opens the gates for the so-called “SNB gap” to be filled sooner rather than later. It means markets should still be pushing to the upside until levels prior to the SNB (Swiss National Bank) drop on the EURCHF pair are completely retraced. This means a move above 1.02, so parity will be the next level the market will focus on.
USDCAD did nothing but what was expected of a US dollar pair when the US data was announced, meaning it jumped almost two hundred pips on the NFP release and closed the week above 1.26. I am still looking for the pair to push higher for the rest of March, with a new high in sight as the 1.3 level is looming.
Last but not least, the USDJPY enjoyed a nice ride, as we mentioned here in the previous article, trading well above the 121 level on the Friday session, only to close just below.
All the above have one single common point: the US dollar.
In a global economy that is showing promising signs of recovery, the United States is doing exceptionally well and Federal Reserve can’t ignore that indefinitely. Therefore, chances for a rate hike this year increased drastically in the US. The unemployment rate also moved well below 5.7% and, just like that, employment is not just a dream for many Americans anymore.
The Fed has all it needs for hiking rates and on a medium/long term basis, the US dollar should only move higher.
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Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
