Did Friday’s NFP start a new trend of a stronger USD or was that just a small correction of the recent trend? We will look for some potential hints on three major instruments: gold, EURUSD and the US dollar index.
First is gold, which has been more bearish in the short term as we had a smaller flag after the heavy drop on Friday, which was suggesting a further decline. Instead of that, the smaller flag was denied and the price bounced off the long-term support on the 1258 USD/oz. Currently we are below the resistance of the much bigger flag (bullish) with high chances of a breakout.
The next instrument is EURUSD, which, on the other hand, will still be bearish as long as the price stays below 1.1825, which is the closest resistance.
Last up is the US dollar index, which after NFP, managed to break two important down trend-lines and stopped right below the last one. So far, it looks like this stop is not really a stop, but a pause, and traders should come back to the buying option soon. The price is locked in a small wedge, where the chances of an upswing are bigger than for a drop.