The first US non-agricultural data released this year, financial market analysts predict that non-farm employment will increase by 400,000 jobs in December, and the unemployment rate will drop to 4.1%. If the results meet or exceed expectations, the US dollar will likely rally higher. Technically, the US dollar index has fluctuated between 95.5 and 96.9 during the past month. If it breaks through 95.5 in the short term, investors should pay attention to the next support level at 95.1. On the contrary, if the US dollar rallies to the 96 level and rises above the 10 and 20-day moving average lines, the next resistance level is 96.7 or 96.9.
The Expected Slowdown in the Eurozone Inflation
Entering 2022, France will take over the EU’s rotating presidency for half a year, with EU member states and foreign trade relations becoming the main focus. In addition, soaring inflation is an issue that most investors are concerned about. The preliminary December CPI values from Germany and the Eurozone due for release on Thursday and Friday will be closely monitored by investors. The market expects Eurozone inflation to jump to 4.9% year-on-year in November, and it is expected to slow down to 4.7% in December. In addition, there will be a lot more economic data from Germany and the Eurozone this week, including the manufacturing and service PMIs, retail sales, industrial output and PPI. As the new wave of Omicron infections has impacted the Eurozone’s growth prospects, the above data has pushed many European governments to adopt stricter measures, which restrict economic activities. This will affect the Euro’s upside, which is quite limited at the moment. Therefore, investors should pay attention to the short-term upper resistance levels at 1.1410 to 1.1430 levels. If the break higher fails, pay attention to the technical support levels at 1.1300 to 1.1275.
If Oil Prices Rise, They Will Support the Canadian Dollar
OPEC and its allies are set to meet on Tuesday to discuss their monthly oil output quotas. The alliance may stick to its existing plan to increase crude oil production by 400,000 barrels per month. Although Omicron has cast a shadow over the global crude oil demand outlook for 2022, the disruption of air travel and crude oil demand is expected to be temporary. If OPEC+ is optimistic about the demand outlook, oil prices may keep rising, supporting the Canadian dollar. As a result, the USD/CAD is expected to drop to 1.2565 or 1.2500.