With today’s Non-Farm Payroll (NFP) figure on the way, traders appear to have lost tremendous optimism about the stability of their portfolios and have temporarily shifted to safety. The US economy has so far benefited from this shift as a stronger dollar should give Americans more buying power in the days ahead.
Forex Market Trends
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
| Daily Trend |  |
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| Weekly Trend | |
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| Resistance | 1.4850 | 1.6589 | 82.46 | 0.8526 | 1.0851 | 0.9025 |
| 1.4643 | 1.6476 | 81.68 | 0.8475 | 1.0749 | 0.8925 | |
| 1.4567 | 1.6422 | 81.28 | 0.8448 | 1.0709 | 0.8888 | |
| Support | 1.4360 | 1.6309 | 80.51 | 0.8397 | 1.0607 | 0.8788 |
| 1.4230 | 1.6250 | 80.14 | 0.8374 | 1.0546 | 0.8725 | |
| 1.4023 | 1.6137 | 79.37 | 0.8323 | 1.0444 | 0.8625 |
Economic News
USD – US Dollar Mildly Bullish ahead of NFP Report
The US dollar (USD) experienced mildly bullish results yesterday as traders began to shift away from the euro (EUR) following the downgrade of Greece by Moody’s Investor Services. The move was followed by a downturn in risk appetite which has so far fueled growth in safe havens like the USD, Swiss franc (CHF) and Japanese yen (JPY).
With today’s Non-Farm Payroll (NFP) figure on the way, traders appear to have lost tremendous optimism about the stability of their portfolios and have temporarily shifted to safety. The US economy has so far benefited from this shift as a stronger dollar should give Americans more buying power in the days ahead.
The issue of interest rate differentials has driven market participants bonkers over the past two weeks. Indeed, the shift in value of safe-havens and the EUR has made forecasting a much more difficult profession. Today’s NFP release from the US economy, however, should give us some much needed perspective. If the figure comes out below expectations, which seems typical these past few months, then we should see a further shift into the safety of the USD, JPY and CHF as traders flee risk.
EUR – EUR in Decline as Region Observes Ascension Day
The euro appears to have lost substantially against its primary currency rivals yesterday following the downgrade of Greece by Moody’s Investor Services. The data releases published over the last several days have pushed many traders away from riskier assets, but the EUR had fought through the pain until the bond rating downgrade. With Europe absent from the calendar yesterday in observance of Ascension Day across most of the region, thin market environments favored the rise of safe-haven currencies.
Many analysts have also the rise in poor fundamental data out of the United States and other large economies. Such detrimental growth figures have weighed on investor sentiment and the ratings downgrade was the straw that broke the camel’s back. The EUR/USD was down from its three-week high of 1.4450 to a current price near 1.4300.
As for today, the euro is largely absent from the calendar. The major news today is the US publication of Non-Farm Payrolls (NFP), but Great Britain’s publication of services PMI data could show further stagnation in the region’s economy. Any additional blight in fundamental data is likely to push more investors into the safety of the Swiss franc and Japanese yen, with the US dollar gaining some of the overflow.
JPY – Japanese Yen Mixed as US Dollar Surges
The JPY has been trading with largely positive results since yesterday as investors turn their focus elsewhere. After a week of ups and downs, the Japanese yen appears set to make gains today as investors largely flee riskier assets. The low interest rates of the Japanese economy have helped pull many investors into the safety of the yen following yesterday’s rate announcement by the ECB.
With Japan’s economy coming back online from a week of holiday celebrations, the market should receive a modicum of additional liquidity from the return of this island giant. The impact may be felt in today’s early hours, but the news from the US economy regarding Non-Farm Payrolls (NFP) will be today’s biggest market mover. Traders should tune in to that report as it is likely to drive today’s more important portfolio shifts and adjustments.
Oil – Crude Oil Prices Plummet Sharply as USD Soars
The price of Crude Oil ended Thursday much lower as traders largely began to pull out from their investments in physical assets while the US dollar made a rapid jump. The result has been a sharp drop in oil prices, pushing well below yesterday’s expected $102 a barrel and landing close to $99 by day’s end.
Recent events have made speculating about oil prices more difficult. The plummeting value of the US dollar over the last few days should have helped lift oil prices, but the commodity remained in free fall for the second consecutive day. Rising stockpiles in the United States, reported Thursday, may have helped fuel the shift away from oil as rising inventory tends to suppress price hikes. As for the rest today, oil prices appear heavily leaning towards the downside, with targets below $99 a barrel in sight.
Technical News
EUR/USD
After rising above 1.4450, a level that coincides with the 50% retracement of the May move lower, resistance is now found at 1.4570 from the 61.8% retracement target followed by 1.4750 from the late April and early May lows. A breach here would target the May high at 1.4940. 1.4350 should serve as the initial support level followed by 1.4160 from the rising support line off of the May low and the 100-day moving average at 1.4070.
GBP/USD
After a failure to close above the 1.6515 resistance level the pair declined sharply and found support near the 50-day moving average at 1.6325. A break below 1.6300 would perhaps then test the rising trend line off of the May 2010 low at 1.6140. Below the trend line the March low at 1.5935 comes into play.
USD/JPY
The yen’s rally failed to breach the 82.25 resistance as well as the 100-day moving average before the pair turned sharply lower while making a significant close below the rising trend line from the May low. Falling daily stochastics point to further declines in the pair. Therefore traders may look to be short on the USD/JPY with initial support at 80.70 and 80.35, followed by the May low at 79.50. A breach here would expose the pre-intervention low at 76.10. A move to the upside and the pair may encounter initial resistance at the previous trend line which comes in at 81.95, followed by 82.25, and retracement targets from the April to May move at 82.50 and 83.25.
USD/CHF
The pair continues to make new all-time lows and as such traders may want to find better levels at which to enter the trend. Initial support is found at 0.8550 followed by the falling trend line off of the February high which comes in today at 0.8780.
The Wild Card
Silver
Silver prices have come off their recent high near $50 and have retraced roughly 38% of the April/May declines before heading lower again. The commodity is currently testing a short term trend line off of the May lows which comes in today at $35.75. Forex traders should note a break here could trigger additional losses back to the May low at $32.30
Written by Forexyard.com