Fundamentals:
The U.S Dollar surged on Friday following Yellen comments in Jackson Hole that the case for an interest rate hike in 2016 has strengthened.
The Greenback traded strongly higher across the board as the Dollar index added 0.84% at the time of the weekly close.
Yen retreated by 1.3% to 102 per dollar after FED chair fueled rate hike bets in 2016 while Bank Of Japan chief Kuroda said he is ready to add further stimulus measures if needed.
The Euro closed below 1.1200 handle, in the meantime, the British pound trimmed the majority of last week gains to stabilize at 1.3120 level.
As of the week ahead, investors will be looking at the U.K PMI, in addition to the GDP figures from Canada and the Australian retail sales, while the focus will be on the U.S Non-Farm payrolls on Friday.
The U.S Economy is expected to add 180 000 additional jobs in August slightly below the year-to-date average which stands at 186K. It is important to note that last month figures were robust and showed a job gains of 255 000. Meanwhile, any number above 150K will reinforce FED officials view that the economy has reached full employment, which may have a positive impact on the next rate hike decision and consequently another rally in the U.S Dollar remain possible.
Technicals:
Looking at the technical outlook of some major currency pairs for the week ahead.
EUR/USD
The Euro retreated on Friday as the Dollar strengthened across the board fueled by the rate hike bets from the U.S following Yellen comments in Jackson Hole.
Technically, the single currency turned bearish in the hourly chart after prices managed to break below 1.1240 support. Therefore, a continuation to the downside in the direction of 1.1160-1.1110 support zone remain possible during the week ahead before to see some demand in the pair. In the meantime, a retracement towards 1.1240/60 new resistance zone (former support) is likely to find strong sellers. In the daily chart, the trend remain bearish below 1.1365 (61.8% retracement from 1.1600 peak to 1.0900 low) and as far as prices keep trading below this level, the upside potential should be limited in the Euro.
Support: 1.1160-1.1110-1.1050
Resistance: 1.1240-1.1260-1.1330
GBP/USD
After the recent rally seen in cable, the pair traded lower by the end of last week on the back of US Dollar strength.
From a technical standpoint, the Sterling remain positive in the hourly chart as far as 1.3025 support is in place. Meanwhile, the focus shifted to 1.3072 level, which represents the 50% retracement of the entire recovery that began from 1.2865 support.
Therefore, a bounce can happen around this level in the coming days and another extension towards 1.3170 resistance is likely. In the opposite, if the pair trades higher in the beginning of this week, then we expect sellers to appear between 1.3170 and 1.3196 resistance levels.
Looking at the biggest picture, the trend remain bearish in the daily/weekly charts and as far as 1.3370 peak is intact, any rally should be short-lived in this pair.
Support: 1.3110-1.3072-1.3025
Resistance: 1.3170-1.3197-1.3230
GOLD
After several attempts to break above 1357 hourly resistance that failed, prices succeeded to break below the support zone of $1333/1328 in the daily chart, which can clear the path to a re-test of 1310-1305 support zone in the next days.
Technically, gold turned bearish in the near-term as prices has shown four consecutive lower highs (1375-1367-1357-1342) from the yearly peak of $1375, which reinforces the probability of further weakness in the coming days. As of now, $1322 represents the short-term resistance level while the most important barrier stands at 1328 for the week ahead.
To summarize, gold remain under pressure and the upside potential is likely to be limited.
Support: 1315-1310-1305
Resistance: 1322-1328-1331
USD/JPY
The pair managed to preserve the psychological support of 100.00 and we have seen a big jump on Friday especially after the strong break above 100.93 resistance level.
Technically, prices showed an upside reaction each time the pair tried to break below 100.00 support as Bank of Japan officials continue to eye this level.
In the near-term, and when looking at momentum indicators, we can see that the pair has more potential to the upside. Therefore, another rally in the direction of 102.60/80 resistance zone cannot be ruled out.
In the flipside, a drop towards 101.50 level should give strong support to USD/JPY.
Meanwhile, when looking at the daily chart, the pair keep printing lower highs/ lower lows since 114.90 peak and consequently, the selling pressure is likely to resume after the current correction finds and end.
In extension, a daily close above 102.80 resistance should send prices to as high as 103.30/60 before to see new sellers.
Support: 101.50-101.25-100.93
Resistance: 102.60-102.80-103.30/57