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In result of the previous trading session the exchange rate slipped to the lower trend-line of a junior ascending channel, as expected. Although the pattern has been broken, the further plunge still seems unlikely, as the southern side is reliably covered by a combination of the updated weekly PP at 1,316.13 and the 55- and 100-hour SMAs. For this reason, the pair is likely to make one more attempt to reach the upper boundary of a dominant five-month long descending channel. Due to absence of any significant data releases the rate might spend most of this week fluctuating between the above trend-line from the north and technical indicators from the south. In larger perspective, bears are projected to take the lead for notable amount of time.

The Greenback feel sharply against the Japanese Yen on the disappointing labour market data. The USD/JPY currency pair dropped 23 base points or 0.20% to the 113.07 level.

The US employment growth weakened significantly in December due to a decrease in retail jobs, while a surge in monthly pay gains indicated the labour market strength, which could enable the Federal Reserve to hike interest rates in Spring. The Labour Department stated that the non-farm payrolls increased 148K in the reported month, following an upwardly revised 252K in November. Job growth is anticipated to moderate as the labour market remains close to full employment, though with some chances to get a boost from $1.5T tax cuts package.

The Canadian Dollar rose markedly against the Greenback, as the country's economic reports released were stronger that the US data. The USD/CAD exchange rate decreased 139 base points or 1.11% to the 1.2369 mark to proceed side move in the 1.2400 area.

Statistics Canada stated that the country's economy added nearly 80K positions in December, owing to rising part-time employment, while the unemployment rate fell to the lowest level in 41 years of 5.7%. Canadian economy revealed unforeseen resilience by the end of the year, as released figures showed quick reduction of slack in the job market that may accelerate the anticipated pace of key interest rate hikes the Bank of Canada intends to implement.

The European single currency was in a side move against the US Dollar on the bloc’s inflation report, which came in in line with forecasts. The EUR/USD rose 8 base points to weaken bearish trend.

The inflation growth in the Euro zone weakened in line with expectations in December, justifying the ECB decision to maintain its monetary policy accommodative, despite higher pressure from Germany and other leading economies. The European Central Bank stated that it would keep buying bonds until September and maintain key interest rate low to strengthen inflation growth to 2% target. Prices in the area increased just 1.4% year-over-year in December, which was by 10 base points weaker than in the prior month due to slow energy and food prices growth.

EUR/USD

Current level - 1.2006

The consecutive failures below 1.2090 hurdle signal a bearish bias, for a slide towards 1.1960, towards 1.1910 area. Minor intraday resistance lies at 1.2020.

USD/JPY

Current level - 113.31

The rise from 112.00 is intact, heading towards 113.70 resistance area. Initial support lies at 112.95.

GBP/USD

Current level - 1.3544

My outlook here is bearish, for a break through 1.3520 support, towards 1.3460. Initial intraday resistance lies at 1.3580.

As the BoJ commenced some minor tapering to its massive Balance Sheet in the month of December, the past week has seen some strong risk-on across Commodities, Equities and JPY crosses. Manufacturing data across the major exporters are still in expansion mode, including Japan, this is good longer-term for the Nikkei, but may complicate JPY price moves. I expect a retrace to the downside on JPY pairs.

Technically the GJ is showing bearish divergence very close to weekly L3 camarilla pivot. The divergence is aligned with historical sellers and if we see a 4h close below M H3, the pair should drop faster towards 152.80- intraday targets and possibly 152.30. Continuation of the bearish drop is expected only if the pair gets below 152.30.

L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Daily Camarilla Pivot (Daily Support)

D L4 – Daily H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

The pair holds firm tone and extends recovery rally from 112.00 zone into fourth consecutive day.

Bulls probe again above cracked double Fibo barrier at 113.25 (Fibo 61.8% of 113.74/110.83 descend / Fibo 76.4% of 113.63/112.05 downleg), firm break of which would be bullish signal for final push towards key points at 113.63 (21 Dec high) and 113.74 (12 Dec peak).

Bullish daily techs continue to underpin, however, converged 10/55/20SMA which now act as initial supports at 112.97/92 zone, are moving sideways, suggesting that bulls may enter consolidative phase before resuming higher.

Daily cloud top marks key near-term support at 112.78 and break lower would generate negative signal.

Res: 113.38, 113.63, 113.74, 114.00
Sup: 113.00, 112.92, 112.78, 112.68

Here are the latest developments in global markets:

FOREX: The US dollar index traded 0.2% higher during the Asian trading session Monday, recovering the losses it posted on Friday following the slightly softer-than-anticipated US employment report.

STOCKS: In Asia, Hong Kong's Hang Seng was up 0.2% while China's CSI 300 was 0.5% higher. Meanwhile, Japanese equity markets remained closed today for the Coming of Age holiday. In Europe, futures tracking the Euro Stoxx 50 are currently up by 0.4%. The three major US equity indices – Dow Jones, S&P 500, and Nasdaq Composite – extended their recent gains on Friday, all closing at new record highs as the so-called “Goldilocks” environment of solid economic growth with subdued inflation continued to support risk appetite. As the earnings season kicks off, JPMorgan Chase, Wells Fargo and Blackrock will be among US companies reporting quarterly results this week. Futures tracking the Dow, S&P, and Nasdaq 100 are currently in positive territory.

COMMODITIES: In energy markets, WTI and Brent crude oil were up 0.3% and 0.2% respectively, likely supported by data released on Friday showing a decline in the number of active US oil rigs, even despite the recent surge in crude prices. Gold was down marginally on Monday, last trading near the $1317 per ounce zone, perhaps weighed on by the broader risk-on market sentiment.

Major movers: Dollar recovers its payrolls-related tumble; loonie flies

The US dollar index inched up by 0.2% on Monday, recovering all the losses it posted on Friday after the US employment report for December fell short of meeting market expectations. Nonfarm payrolls came in at 148k, notably less than the consensus estimate of 190k, but the previous figure was revised higher somewhat. The unemployment rate remained unchanged at 4.1% as was expected, and although the all-important average hourly earnings met their forecast of +0.3% m/m, the previous print was revised lower. Overall, these data confirmed what we already knew about the US economy; that the labor market is relatively tight, but wage growth remains subdued and thus, they are unlikely to have much impact on the Fed's thinking.

Both euro/dollar and sterling/dollar were down slightly, likely a reflection of the greenback's rebound rather than euro or sterling weakness.

The Canadian dollar skyrocketed on Friday, reaching a 3-month high against its US counterpart, after the nation's employment data for December crushed market expectations, showing that the labor market continues to tighten at a rapid pace. At the time of writing, market pricing has tilted in favor of a rate hike at the Bank of Canada's upcoming meeting in January, with the implied probability for such action resting at nearly 70% according to Canada's Overnight Index Swaps.

The antipodean currencies were mixed against the greenback, with aussie/dollar trading 0.3% lower on Monday, but kiwi/dollar being marginally higher.

Day ahead: UK house prices and eurozone retail sales among day's releases

The UK will see the release of data on house prices at 0830 GMT. The Halifax house price index is anticipated to show house prices rising for the sixth straight month in December, though at a weaker pace relative to November.

Numerous eurozone business and consumer surveys are scheduled for release today. Those include January's Sentix index, which gauges investors' sentiment for current conditions and expectations for the coming months, due at 0930 GMT. The European Commission's Directorate General for Economic and Financial Affairs will later – at 1000 GMT – release its December business climate and economic sentiment surveys, as well as the final reading on December consumer confidence. Although these surveys will be gathering some attention, they're not typically major market movers.

Eurozone retail sales figures for the month of November will also be made public today at 1000 GMT. Sales are expected to reflect an acceleration on both a monthly and yearly basis.

Loonie traders might be paying attention to the Bank of Canada's survey on the business outlook scheduled for release at 1530 GMT.

Out of the US, consumer credit figures for the month of November are due at 2000 GMT.

Fed speakers making appearances today include Atlanta Fed President Raphael Bostic who will be speaking on the economic outlook and monetary policy at 1740 GMT. John Williams and Eric Rosengren, the San Francisco and Boston Fed Presidents, will also be participating in discussions scheduled to begin at 1835 GMT and 2125 GMT respectively.

Technical Analysis: EURUSD under pressure in short-term

EURUSD is on its second straight day of declines and the falling RSI indicator is pointing to negative momentum in the short-term.

Stronger-than-anticipated eurozone retail sales figures later today could lend some support to the pair. In such an event, the area around last week's four-month high of 1.2088 is expected to act as a barrier to the upside. Notice that this level is extremely close to September 8's three-year high of 1.2092, something which perhaps increases its significance.

If on the other hand retail sales disappoint, market participants are anticipated to push the pair lower; below the 1.20 handle. The range around this level – which was momentarily breached earlier for the pair to hit its lowest since late December – seems to be providing some support at the moment. It should be mentioned that the area around this mark also encapsulates a top from the recent past at 1.1960. Further below, 1.1879 – a top recorded in October – would be eyed for additional support; the area around this level was a congested one recently as well.

Cable holds in red at the beginning of the week and moves lower after repeated failure to regain 1.3600 handle.

The pair hit session high at 1.3585 in early Asian trading (ticks above Thu/Fri rally’s peak at 1.3581) before starting to ease.

Overall picture remains bullish and would keep immediate focus at the upside while current congestion stays above key supports at 1.3490/83 (last week’s low / rising 10SMA).

Rising 4-hr cloud (spanned between 1.3480 and 1.3465) also underpins the action and sustained break here would generate negative signal for deeper pullback towards next strong support at 1.3420 (Fibo 61.8% of 1.3301/1.3612).

Bullish scenario requires firm break above 1.3600 zone to expose key barrier at 1.3655 (20 Sep high) the highest point of post-Brexit recovery rally.

Res: 1.3585, 1.3600, 1.3612, 1.3655
Sup: 1.3522, 1.3493, 1.3483, 1.3457

The Euro stands at the back foot in early Monday's trading and pressures the top of key near-term support zone between 1.2000 and 1.1970 (last week's triple-bottom / rising 10SMA).

As I mentioned in previous comments, repeated failures under pivotal 1.2100 resistance zone could result in corrective action.

The pullback was also signaled by reversal of daily RSI / slow stochastic from overbought zone.

The indicators are heading south and showing room for further extension of pullback from 1.2080 zone peaks, with sustained break below 1.2000/1.1970 to generate bearish signal.

Next good support lies at 1.1947 (Fibo 38.2% of 1.1717/1.2088 upleg, where corrective action should be ideally contained, before broader bulls resume.

Extension below 1.1947 would risk test of pivotal support at 1.1900 (daily Kijun-sen / 50% retracement) loss of which would signal reversal.

Res: 1.2000, 1.2052, 1.2088, 1.2100
Sup: 1.1961, 1.1947, 1.1928, 1.1900