It has been a historic day on the markets with the DJIA cracking 25,000 for the first time ever. From the first few sessions of 2018, it appears that institutions are going long in both commodities and equities. The USD has weakened but hung in there against the majors.

Strong employment metrics and equities valuations are likely to set the stage for aggressive rate tightening from the FED in 2018. Here are a few upcoming items that may impact the currency markets for the U.S. overnight and pre-market hours:

Country                              Event

Japan                                 Markit Services PMI (Dec.)

Germany                            Retail Sales (Nov.)

E.U.                                    Unemployment (Nov.), CPI (Dec.), PPI (Nov.)

U.S.                                    Unemployment Rate (Dec.)

The U.S. Unemployment Rate is the headliner of this group of reports. Analysts are projecting it to remain at a stati 4.1%. Given the boost in seasonal employment around the holiday season, we may be in for a surprise. An unemployment number under 4% will give the FED even more ammunition to begin a sustained tightening of monetary policy.

USD/GBP Technicals

Currently, there is a live trading signal on the board for the GBP/USD. It is performing well, pricing heavily in the green. Below is the technical roadmap for the late U.S. forex session.

Here are the key support and resistance levels:

• Resistance(1): Swing high, 1.3612
• Support(1): 38% retracement, 1.3493
• Support(2): 20 Day EMA. 1.3434

Bottom Line: The coming unemployment reports out of the Eurozone and U.S. are going to dictate what happens in this market. For now, I will be looking to scalp small pips to the long from 1.3496.

Wednesday’s session low coupled with the 38% retracement level is likely to enhance participation. A 1:1 R/R management plan looking for 8-12 pips is an affordable way to play rotation from a key technical area during the U.S. overnight hours.