EURJPY TECHS: Pierces Resistance

• RES 4: 164.90 High Dec 30 and a key short-term resistance
• RES 3: 164.08 High Jan 24   
• RES 2: 161.90 50-day EMA
• RES 1: 160.70 High Feb 4
• PRICE: 159.21 @ 16:12 GMT Feb 5  
• SUP 1: 158.50 Low Feb 5
• SUP 2: 156.99 Low Dec 4     
• SUP 3: 156.18 Low Dec 3 and a key support  
• SUP 4: 155.15 Low Sep 16 ‘24   

A bear threat in EURJPY remains present. The cross traded to a fresh short-term cycle low Monday, confirming a resumption of the bear leg that started Dec 30 last year. An important retracement point at 158.24, 76.4% of the Dec 3 - 30 bull cycle, has been pierced. A clear break of it would signal scope for an extension towards 156.18, the Dec 3 low. On the upside, initial firm resistance to watch, and a pivot level, is 161.90, the 50-day EMA.

January’s employment report will receive almost as much attention for comprehensive revisions as for the monthly nonfarm payroll gains, which are expected to slow to 170-180k from December’s strong 256k.

• January is typically a difficult month to forecast payrolls (estimates range from 135k-225k), with a pronounced seasonal pattern that includes large post-holiday layoffs.
• Wildfires in Southern California could act as a small drag this month – we have seen some estimates on the order of circa 20k – although extremely cold weather didn’t fall in the payrolls reference period.
• The unemployment rate is expected to print 4.1% for a second month, while average hourly earnings and hours worked are seen relatively steady.
• The annual revisions to the establishment survey are seen lowering the level of payrolls that had previously been registered for March 2024 by around 700k, while we’ll be closely watching the revisions to the seasonal factors for the past five years. New population controls for the household survey also feature.
• There is little to no urgency among Federal Reserve policymakers to ease policy in the near future, but a large downside miss could crack the door back open to a March rate cut.
• The revisions could make it hard to get a clean immediate read on the January data’s implications for monetary policy, but with rate cuts being priced out, the FOMC may prove more sensitive to downside than upside surprises after a period in which downside risks to the labor market appeared to have dissipated.
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• Stocks continue to extend gains/pare losses, the Nasdaq mildly underperforming in late Wednesday trade. Currently, the DJIA trades up 250.53 points (0.56%) at 44807.48, S&P E-Minis up 14 points (0.23%) at 6077, Nasdaq down 8 points (0%) at 19646.43.
• Information Technology and Health Care sectors continued to lead gainers in late trade: Johnson Controls International gaining over 12.25% after beating earnings estimates (and replacing it's CEO) this morning, while Fiserv Inc gained 7.45%, Super Micro Computer +6.79% and Broadcom +6.21%.
• Better than expected earnings also helped pharmaceuticals with Amgen +6.23%, Bio-Techne gaining 4.8% and Regeneron Pharmaceuticals +2.77%.
• Communication Services and Consumer Discretionary sectors continued to underperform in late trade, interactive media and entertainment shares weighing on the former with Alphabet -8.08% after beating street estimates in 4Q EPS, but missing 4Q revenue, Match Group -7.62%, Interpublic Group -3.99%.
• Leading laggers in the Consumer Discretionary sector included Tesla -3.22%, Chipotle Mexican Grill -2.69%, Nike -2.46 and Amazon -2.3%.
• Reminder, earnings expected after the bell include: MetLife, Cognizant Technology Solutions, MicroStrategy, QUALCOMM Inc, Skyworks Solutions, McKesson Corp, Molina Healthcare, Viking Therapeutics, Ford Motor Co, Allstate Corp and O'Reilly Automotive Inc.