Daily Forex Market Commentary

The U.S. dollar traded higher on Friday as the U.S. economy added 163,000 jobs in March, the fastest pace of growth in three years.

The greenback traded higher against all the major currency pairs, however this may have just been a correction in the recent strength that most of the majors, minus the Japanese yen, have being displaying recently against the U.S. dollar. Some of the dollar strength we saw on Friday can be attributed to profit taking before the Easter weekend, as well as a case of “sell the fact”, after the U.S. employment numbers came out.

Looking ahead, optimism about an improving labor market and corporate profits could push U.S. stocks higher this coming week as earning season approaches. Typically when stocks move higher, safe-haven currencies like the U.S. dollar and Japanese yen tend to lose ground to currencies with higher interest rate yields.

Stocks:

U.S. stock markets were closed for the Good Friday holiday, however a strong showing in Friday’s non-farm payrolls report will likely add fuel to the fire that has been pushing stocks higher as of late.

Most market analysts expect that the payrolls data will add support to the stock market as U.S. stock futures rallied on Friday in the wake of the employment numbers release.

However, the S&P 500 index is up 74 percent from the March 2009 low and some analysts are worried the rally be interrupted if the economy does not maintain its strength.

Investors will be looking for corporate guidance as we head into earnings season, which starts with Aloca Inc on April 12.

Currency pair in focus: AUD/USD

Today we are looking at the AUDUSD daily chart. Momentum has been bullish in this pair recently and on Friday the market formed an inside bar just below resistance near 0.9215-0.9250.

The zoomed out daily chart below shows the story more clearly. Should we see a decisive break up from Friday’s inside bar high and past the 0.9250 area, the market is likely to re-test resistance near 0.9400 and should this level break, the all time highs would be the next target near 0.9850.

For a great video on the inside bar please click here: Inside bar training video

For a more in-depth analysis of the major FX pairs as well as price action training, please check out my forex trading course.