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Anyone up for a countertrend trade today?

I’m looking at this potential bounce for the dollar in case the ADP report surprises to the upside!

Before moving on, ICYMI, yesterday’s watchlist checked out EUR/USD’s range setup ahead of the FOMC minutes. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

U.S. Dec ISM manufacturing PMI dipped from 49.0 to 48.4, but jobs index higher

U.S. JOLTS job openings at 10.46M in Nov vs. 10.04M forecast

FOMC minutes signaled scope for higher rates for “some time” ahead

Chinese Caixin services PMI improved from 46.7 to 48.0 vs. 46.8 forecast in Dec

Japanese PM Kishida urges businesses to bump up wages to spur inflation

Japanese consumer confidence index up from 28.6 to 30.3 in Dec vs. 28.2 forecast

German trade surplus grew from 6.9B EUR to 10.8B EUR in Nov, exports down 0.3% m/m

France and Germany watching China COVID situation closely

Upcoming Potential Catalysts on the Forex Economic Calendar:

U.S. Challenger job cuts at 12:30 pm GMT
U.S. ADP non-farm employment change at 1:15 pm GMT
U.S. EIA crude oil inventories at 4:00 pm GMT
Chinese trade balance coming up

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: USD/CAD

USD/CAD 1-hour Forex Chart from TradingView

USD/CAD 1-hour Forex Chart from TradingView

This pair is sitting right on the very bottom of its descending channel!

Will dollar bulls be gutsy enough to charge right here?

It could all boil down to the outcome of the ADP non-farm employment change report, which might have big clues for the official NFP release.

Number crunchers are estimating jobs growth of 152K, slightly higher than the earlier 127K figure. Stronger than expected results could spur a strong bounce for USD/CAD back to nearby resistance levels.

In particular, the mid-channel area of interest could be a good target for buyers, as this lines up with the dynamic resistance at the moving averages.

Stronger bullish vibes could lift USD/CAD all the way up to the channel resistance at the 1.3650 minor psychological level.

If you’re more of a trend-follower, then you might want to wait for selling opportunities at these resistance zones. Either that or be ready to hop in on a break below the channel bottom near the 1.3500 handle.

Just note that Stochastic is still pointing higher to reflect the presence of bullish momentum and that the oscillator has some room to climb before reaching overbought levels.

In any case, don’t forget to account for the average USD/CAD volatility when setting entries and exits!