The U.S. dollar snapped the recent bullish momentum against its major counterparts on Friday after the U.S. monthly jobs report failed to alter investors’ expectations over the timing of the next Fed rate hike move.
The British pound's flash crash during the early Asian session grabbed all the attention on Friday, but the cause of the unraveling in the U.K. currency remained a mystery.
Friday's NFP headline showed the U.S. economy added 156,000 new jobs in September, slowing further from the previous month's upwardly revised 167,000. The slower pace of job creation hinted toward a possible slowdown in the U.S. economy since last year, but the labor market remains one of the brightest spots of the U.S. economy, characterized by moderate overall recovery.
Meanwhile, improvement in Donald Trump's performance during the second presidential debate curbed investor risk appetite on Monday with both the pound/dollar and the euro/dollar pairs failing to recover from a lower opening. With U.S. banks closed Monday in observance of Columbus Day, a relatively thin economic docket from the U.K. and eurozone seems unlikely to provide any momentum, and the British pound should continue to react to any fresh Brexit-related news.
Technical outlook
Pound/dollar
The pair now seems to have found immediate support around the 1.2400 to 1.2390 region, marking 50% Fibonacci retracement level of the recent 1.2760 to 1.2020 plunge. A sustained weakness below this immediate support seems to drag the pair back toward 38.2% Fibonacci retracement level support near the 1.2300 handle below which it gets exposed to 23.6% Fibonacci retracement level support near the 1.2200 to 1.2190 region.
On the flip side, momentum above 1.2440 immediate horizontal resistance is likely to get extended toward 61.8% Fibonacci retracement level resistance near the 1.2475/80 region, which if conquered should help the pair extend its recovery trend toward the 1.2600 round figure mark.
Euro/dollar
The pair remains confined within a short-term trading range but now seems to be confronting immediate resistance near the 1.1200 handle. Hence, a follow-through selling pressure below 1.1170 should drag the pair back toward the 1.1150/45 region en route to the 1.1120 strong support area.
Meanwhile on the upside, a convincing move above the 1.1200 handle should help the pair toward a short-term descending trend-line resistance, currently near the 1.1240/45 region, above which any near-term bearish bias gets negated, and the pair could immediately rally beyond the 1.1300 handle toward its next major hurdle near 1.1350.
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