Midweek technical analysis – USD/JPY, EUR/USD, USD/CAD [Video]

FOMC Meeting Minutes --> EUR/USD

Investors will closely examine today's FOMC meeting minutes, due at 19:00 GMT, for insights on the Fed's next policy steps. In December, the Fed slashed rates by 25bps, and the dot plot showed a 50bps higher target for 2025 than previously expected. While Powell’s hawkish stance is priced in, any fresh hints on the timing of future rate cuts could impact the US dollar ahead of Friday’s jobs report.

For EURUSD, the pair struggled near its 20-day SMA and the 1.0435 level on Monday, renewing downside risks. Attention now shifts to the 1.0200 support area, a break of which could see a test near 1.0155, with parity becoming a possibility as well. On the upside, a rebound above 1.0400 won’t boost sentiment unless the pair clears the 1.0500-1.0540 area too.  

US Nonfarm Payrolls --> USD/JPY

December’s nonfarm payrolls report due on Friday at 13:30 GMT could spark significant volatility as traders debate the timing of the next rate cut. Analysts expect a gain of 160k jobs, down from November’s 220k, with the unemployment rate holding steady at 4.2%. Average hourly earnings may ease slightly to 0.3% m/m but stay at 4.0% annually.

USDJPY has been struggling to close above 158.00 despite hitting a new six-month high of 158.54 earlier today. The technical signals reflect overbought conditions, with traders waiting for a clear break above the 158.63 barrier to target the next resistance at 160.20. An upbeat jobs report could provide a helping hand to the bulls.

Otherwise, if the jobs report disappoints, pressing the price below the support trendline at 157.30, the 20-day EMA could immediately come to the rescue near 156.15. If not, the next pivot point could occur within the 154.85-154.00 territory.  

Canadian employment --> USD/CAD

In Canada, the focus will turn back to the data and particularly to Friday's employment figures due at 13:30 GMT following Trudeau's resignation.

Analysts expect a weak print, with job growth slowing to 25k in December from November’s 50.5k, while the unemployment rate could tick up to a three-year high of 6.9% from 6.8% previously. A disappointing report could seal a 25bps rate cut, pushing USDCAD toward the 4 ½ -year high of 1.4470 or even up to the 1.4500 round level. Then, the door could open for the 2020 and 2016 highs registered within the 1.4665-1.4689 zone.

If the data surprises to the upside, USDCAD may test the support level at the 20-day EMA around 1.4315, with the trendline at 1.4270 also providing a safety net. A close lower could lead to 1.4155.