FX Talking Points:
- Tomorrow brings the release of jobs numbers out of both the United States and Canada at 8:30 AM ET.
- It’s been an especially volatile past week in the US Dollar, going along with big moves in Oil and Gold and equity markets as well. Will tomorrow’s NFP prod those themes to further continuation? Or are we sitting on the cusp of a reversal?
- DailyFX Forecasts are published on a variety of currencies such as Gold, the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.
Stage Gets Set Ahead of NFP
Tomorrow brings Non-Farm Payrolls out of the United States at 8:30 AM ET, and this release comes amidst a busy backdrop that’s seen a number of technical themes in play. This webinar is designed to look at strategy around the US Dollar ahead of that release, and the major focal point of USD will be central to the markets looked at in this session.
On the fundamental front and helping to drive these recent moves is a key theme of importance around the Federal Reserve. The Fed has now hiked rates eight times since the election of President Donald Trump in 2016; coming in stark contrast to the one hike that was seen in the prior nine years. This rate tightening was coupled with another form of tightening via balance sheet reduction, and in Q4 of last year markets began to exhibit trepidation around this theme as risk aversion showed up, with aggression, and lasted into the end of the year.
But as the Fed adapted, growing less hawkish with future rate forecasts, risk markets began to rally and that theme lasted into May trade. The early-May FOMC rate decision appears to have been another pivot, and this is when US equities began selling-off again. The yield curve went back to inversion and rates markets are now looking for as many as three cuts from the Federal Reserve by the end of this year. Chair Powell’s commentary earlier this week helped that theme and stocks continue to rally in the aftermath of that speech; but key for continuation will be the release of tomorrow’s jobs numbers ahead of the FOMC rate decision in a couple of weeks.
US Dollar Near Two-Month Lows, Trend-Line Support
Chart prepared by James Stanley
EURUSD Tests Trend-Line Resistance After ECB
This morning brought an ECB rate decision into the fray, and while the bank didn’t offer any earth-shattering announcements, the general trend of dovishness continued to play through. Via price action, however, prices in EURUSD have rallied around that rate decision. A bit of resistance is showing around the trend-line that connects last September’s swing high to the March swing-high; and this comes after today’s price action caught support in a key zone on the chart, looked at in Tuesday’s article entitled, Euro Outlook: EUR/USD Price Snaps Back to Resistance Ahead of ECB.
EURUSD Daily Price Chart
Chart prepared by James Stanley
GBPUSD Capped at Resistance, Prior Support
That theme of USD-weakness hasn’t been avoided in GBPUSD; but noticeably different from the above look at EURUSD is the fact that the bullish advance has been more tempered. A zone of prior support that contains three longer-term Fibonacci levels has helped to cap the retracement, and this runs from 1.2671-1.2721, marking a 50 pip zone of interest on the chart. As of yet, buyers haven’t been able to push up to a fresh higher-high, keeping GBPUSD as an item of interest for USD-strength strategies.
GBPUSD Four-Hour Price Chart
Chart prepared by James Stanley
AUDUSD: Can Recovery Continue Past the .7000 Big Figure?
It’s been a busy past month in AUDUSD, as the pair put in a decisive drop below the psychologically important .7000 figure in the month of May. Last month marks the first month since the financial collapse that AUDUSD finished the period below this level on the chart.
More recently, however, items of recovery have started to show; and this kicked off a few weeks ago after the pair gapped-higher to start the week. Since then near-term price action has posed a continued build of higher-highs and higher-lows and, as looked at on Tuesday of this week, a key zone of potential resistance sat just ahead on the chart from .7000-.7019.
That area has since come in to hold the highs. But, buyers at this point haven’t relinquished control, as seen by yesterday’s build of higher-low support around the .6960 level. If the USD sell-off is going to continue, the topside of AUDUSD can remain as attractive as the pair further claws back prior losses.
AUDUSD Two-Hour Price Chart
Chart prepared by James Stanley
USDCAD Tests Range Support Ahead of Dual Jobs Releases
Tomorrow at 8:30 AM ET brings another item of interest with the release of Canadian jobs numbers for the month of May. This can make for an especially pensive backdrop in USDCAD; and this week has already seen some interesting dynamics play out in the pair.
Last week’s bullish breakout fell-flat, topping-out at the 1.3565 level looked at ahead of the Bank of Canada rate decision. Price action has since fallen back into the prior range, with the Fibonacci level at 1.3361 helping to set support. For traders looking at strategies for a return of USD-strength, this could remain as an option.
USDCAD Four-Hour Price Chart
Chart prepared by James Stanley
To read more:
Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.
Forex Trading Resources
DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.
If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
