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Debt Ceiling Fears Ease, Focus Shifts To NFP Report

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Good morning, it’s NFP day. The U.S. payrolls report is estimated to show a gain of 500k jobs in September that could also cement expectations that the Federal Reserve will soon start tapering bond purchases.

As for the U.S. debt ceiling, the risk of a potential default later this month had been averted (at least for now) as Congressional leaders in Washington appeared to agree to a short-term deal to raise the debt limit. However, the short-term agreement does not solve the larger problem of a looming default for the largest global economy.

The U.S. dollar was steady ahead of today’s NFP report which is scheduled for release at 12:30 UTC. If data beat expectations the greenback will further rise as the market can start to price in a more aggressive Fed rate hike cycle.

We will know more later. However, traders should be cautious and brace for higher volatility.

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NFP Report: Caution – Danger of Burns

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As expected, we saw some bigger movements on Thursday with market participants positioning for a stronger payrolls report after ADP employment change surprised on the upside. Short traders in both EUR/USD and GBP/USD were able to profit yesterday and everyone is eager to see whether today’s U.S. jobs report will shift the Federal Reserve taper talk. If the report beats expectations, the U.S. dollar will soar as there is more pressure on the Fed to make a hawkish move, sooner rather than later.

However, expectations are very high today and traders should be cautious amid potential exaggerated market reactions around the release time of the jobs report at 12:30 UTC. Extreme volatility can quickly erase previous gains and lead to steep losses. Payrolls estimates range from 335,00 to 1 million job gain in May, so anything is possible which is why it is extremely dangerous to take a position ahead of the release.

What should also be monitored closely is the wage inflation number. The greenback will benefit from a higher reading with taper speculation gaining traction.

While everything will depend on the NFP outcome, let’s take a brief look at the technical picture for better orientation.

EUR/USD

The overall trend is still upwards with crucial support zones seen at 1.20, 1.19 and 1.16. In short-term time frames, if the euro falls below 1.2070, we expect further losses towards 1.19. On the upside, bulls will need a significant break above 1.23 and further 1.2350 in order to shift the focus towards 1.25.

GBP/USD

As long as the cable trades above 1.4050, the recent upward trend channel remains intact. A crucial support-zone comes in between 1.40 and 1.3950 and once that zone is breached to the downside, we anticipate steeper corrections towards 1.38 and 1.37. On the upside, bulls will need to overcome 1.4250 in order to push the pound towards 1.4350.

 

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

We wish you good trades!

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Wait-And-See Approach Ahead of U.S. Job Report

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The market was relatively quiet Wednesday as market participants took a wait-and-see approach ahead of tomorrow’s U.S. jobs report. We could see some bigger moves today as we have ADP employment change (12:15 UTC) and the ISM index (14:00 UTC) scheduled for release, offering a small foretaste of what to expect from Friday’s payrolls. If ISM data disappoints, we could see the U.S. dollar depreciating with traders positioning for weaker job growth.

The British pound found a slightly lower support at 1.4110 rather than 1.4120 but remained overall sideways in short-term time frames. We expect a lower support to come in at around 1.4080 whereas a break below 1.4070 could open the door for larger losses. On the upside, the 1.4340-mark is seen as a next bullish target.

The EUR/USD trades flat. Above 1.2250, the next target is 1.23, whereas below 1.2170, the focus shift towards 1.21.

 

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

We wish you good trades!

Any and all liability of the author is excluded.

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U.S. Dollar Trades Slightly Higher Against Major Peers

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The U.S. dollar traded slightly higher against other major peers Tuesday.

The British pound retreated from its high around 1.4250 and fell back below 1.42, trending lower towards 1.4140. While much of yesterday’s downward move can be attributed to the dollar’s rebound ahead of Friday’s NFP report, concern over a new coronavirus strain in the U.K. contributed to the bearish movement.

If the GBP/USD falls below 1.4120 we expect further losses towards 1.4050 whereas a renewed break above 1.42 could lead to a test of 1.4270 and possibly even 1.4320.

There is nothing new to report in the EUR/USD and we continue to watch out for prices between 1.23 and 1.2080.

DAX: As expected, the index found a short-term resistance at around 15680 from where we saw a slight reversal. A next higher target is 15700. On the downside, we expect the price area between 15250-15150 to act as a support.

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Quiet Start To The New Week

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Welcome to this new trading week, which we hope will provide more profitable opportunities than the last consolidative week.

U.S. and U.K markets are closed today for the Memorial Day and the Spring Bank holiday, so it might be a quiet start to the new week. Later in the week, the focus turns to the May U.S. Nonfarm Payrolls report that will offer clues on the economic recovery. It will be interesting to see whether the previous disappointing job gain in April was a one-off or the start of something more persistent. Economists expect that ongoing reopening in the U.S. will pull a significantly higher number of Americans into employment in May, so Friday’s job report shouldn’t be as disappointing as the previous one.

GBP/USD

The latest consolidative phase leaves prices confined to a sideways trading range between 1.4240 and 1.4090. Once that price range is broken, we expect a higher target to be at 1.43. On the downside and with a break below 1.4090, a next support may come in at around 1.4050.

EUR/USD

Looking at longer time frames it seems as if bullish momentum is fading with the pair being on overbought territory. While 1.23 remains a next target to watch out for, sentiment could quickly change in favor of the bears if the euro is unable to overcome 1.2250. Below 1.2050, the euro could fall towards 1.1950 and 1.1850.

 

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EUR/USD And GBP/USD See Upside Potential

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Welcome back at the desks after a long weekend.

Nonfarm payrolls data released on Good Friday smashed all market expectations and came in at 916k which was the strongest job gain in seven months. However, average hourly earnings did not surprise to the upside and given the low volatility environment during the Easter holiday, there were no major market movements.

The rapid healing of the U.S. labor market could lead to a stronger U.S. dollar in medium-term time frames as market participants will slowly shift their focus towards a change in the Fed’s future interest rate path. Investors will also assess the impact of the Biden administration’s proposed increase to the corporate tax rate, fearing that higher taxes will hinder the economic recovery.

Both EUR/USD and GBP/USD started the new week on a positive note and further bullish momentum could be ahead. Let’s take a look at the technical picture:

GBP/USD

The British pound has generally strengthened against its counterparts in the first quarter as the market prices in a faster return to normality on the back of the U.K.’s successful vaccine rollout. With the U.K. government moving to the next stage of its four-stage reopening plan, optimism could drive the pound higher. As long as the currency pair holds above 1.38 and 1.3750, we anticipate an uptick with a potential test of 1.40 – a crucial resistance level. If 1.40 breaks to the upside, higher targets are seen at 1.42 and 1.4450.

EUR/USD

Fading U.S. Dollar strength has helped the currency pair to stabilize around 1.18. While the Eurozone continues to face challenges, the euro is likely to remain under pressure. Nonetheless, we will turn our focus to the resistance area between 1.1950 and 1.20 which could provide a profitable opportunity to sell euros at higher levels. Above 1.2015, the euro could even test 1.2150. On the downside we see a short-term support at 1.1670 followed by a crucial support at 1.16. If 1.16 breaks to the downside a next lower target is seen at 1.12.

DAX

The index knows only direction – upwards. While we pencil in a next higher target at 15750, we also brace for a correction. The 15000 level could now serve as a support but if it breaks, we could see a deeper correction towards 14800 and possibly even 14400.

This week we will have the FOMC meeting minutes on Wednesday but we don’t expect the minutes to serve as a catalyst for big market movements. On Thursday Federal Reserve Chairman Jerome Powell takes part in a panel about the global economy.

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Good NFP Report on Good Friday

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It is Good Friday and trading volumes are below average as the Easter holidays begin.

Traders however brace for the U.S. jobs report today at 13:30 UTC and very strong data is expected. In case of any surprises, we could see some volatile moves in a holiday-shortened trading session.

We wish everybody a nice Easter holiday!

We will be back on Tuesday, April 6.

 

We wish you good trades!

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Two Key Events Ahead Of The Easter Holiday

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Ahead of the Easter weekend there are two key events to watch this week:

  • U.S. President Joe Biden plans to unveil a further stimulus program with a tilt toward infrastructure. Biden will outline his plan in Pittsburgh on Wednesday, according to White House administration officials. Inflation expectations are likely to rise further following Biden’s announcement.
  • On Good Friday the U.S. employment report for March is due for release and economists expect a big 500K job gain, which would bode well for the U.S. dollar. While the U.S. dollar may continue to appreciate ahead of Friday’s job report, volatility could be subdued towards the end of this week with most trading exchanges being closed for the Good Friday holiday, leading to illiquid market conditions.

EUR/USD

With Europe heading towards a third Covid wave with an extension of restrictive measures, the Euro is expected to remain under pressure. Euro bulls looking for short-term pullbacks will watch out for an upside break of 1.1830 with a higher target at around 1.1870. If the euro falls below 1.1730 next lower targets will be at 1.17 and 1.1630.

As the EU economy is likely to recover later and less strongly from the pandemic than other countries, the euro will continue to weaken against other currencies.

GBP/USD: The British pound traded higher against the U.S. dollar last Friday but as long as the area around 1.3880-1.39 remains unbroken to the upside, bears could regain control in this pair. Bullish momentum seems to have subsided as of late, so we may see a period of consolidation now.

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Will The NFP Report Boost Demand For U.S. Dollars?

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After we have finished our trading on Thursday, we saw a sharp drop in both EUR/USD and GBPUSD which was due to a strengthening U.S. dollar. The reason for the dollar’s fresh strength was Federal Reserve Chair Jerome Powell who said in an online event yesterday that he would be “concerned” by disorderly markets but he refrained from pushing back more forcefully against the recent spike in Treasury yields. The dollar climbed as benchmark 10-year bond rates topped 1.5 percent.

EUR/USD: Next bearish target is 1.19. In case of a correction, bulls may push the pair higher towards 1.2050 and 1.2080 from where price may retrace.

GBP/USD: Next bearish target is at around 1.38. Falling below 1.38, losses could be extended until 1.3760-50. After the 1.40-level has proven challenging for sterling bulls, we expect the price to retrace at around 1.3980 in case of any bullish movement today. For the sentiment to shift in favor of the bulls we will need to see a bullish break above 1.4025.

The next high-impact event risk will be the release of monthly payrolls data today at 13:30 UTC. Nonfarm payrolls are forecast to add 180,000 positions in February, far better than the loss in December and January. If the forecasts are correct the dollar could rise. An outcome of fewer than 100,00 jobs would push the dollar lower. We will also pay attention to the average hourly earnings figures which will have an impact on the dollar’s path.

We wish you good trades and a beautiful weekend!

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

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GBP/USD: Inverted SHS-Pattern To Predict Bullish Breakout?

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Wednesday’s trading has proven challenging as our major currency pairs struggled to find a clear direction. GBP/USD rejected 1.40 but subsequent bearish momentum was not enough to send the pair below 1.3920 on the downside. EUR/USD tried an upside break of 1.21 before the U.S. dollar strengthened, pulling the pair lower towards 1.2040. The DAX was initially the best performer but the index refrained from ticking any higher than 14200 and consequently experienced a sharp reversal towards 13900.

What was the reason for yesterday’s direction change?

Bond yields surged again, dragging down shares on Wall Street. The U.S. dollar benefits from rising yields but yesterday’s dollar strength appeared to be limited. There is a risk that tomorrow’s Nonfarm payrolls report could disappoint dollar bulls, which is why the dollar’s appreciation ahead of the report could be limited. While the Fed has no intention to tighten its monetary policy anytime soon, the rise in bond yields reflects the market’s implicit way of tightening.

The EUR/USD was little changed and we recommend paying attention to price breakouts either above 1.2110 or below 1.1980.

GBP/USD – Inverted SHS formation to predict bullish breakout?

We currently see an inverted head-shoulder pattern in the 4-hour chart which could predict upcoming bullish momentum once the 1.40-level is successfully broken to the upside. A higher target could be at around 1.4170 after a potential breakout. The pattern becomes void if price breaks below 1.3850.

DAX: After another test of 14200 failed to provide a breakout, the index remains confined to a sideways trading range between 14200 and 13600.

We wish you good trades!

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