EUR/USD overview after the "worst-than-expected" NFP numbers
US NFP numbers for May were worst-than-expected, as the United States only added 38,000 jobs during that month, according to the report published by the Labor Department, which absolutely put it below the 165K forecast. In terms of statistics, that's the weakest number of jobs released since September, 2010, and of course, it weightened on the Greenback, that is expecting a possible rate hike by the Federal Reserve in mid-july, at least an scenario that is still expected to happen by the Cleveland Fed Chairwoman, Loretta Mester, in a speech held during saturday after the US “black friday” of jobs numbers.
However, following the jobs sector numbers in the US, unemployment rate decreased to 4.7%, which means a number below the expectations of 4.9% for May. In a technical overview, EUR/USD closed the week with a huge bullish move and an afterwards consolidation above the 200 simple moving average at H4 chart, also confirming the bearish trend line breakout (projected from May 3rd high). A corrective move could be expected in coming days toward the 200 SMA, as it's facing-off a resistance around the 1.1348, but an upside continuation will lead the pair to test the resistance zone of 1.1431.
Last week AUD/USD rose to 0.7360 as Australian GDP showed solid gains in Q1 (+1.1%), while US nonfarm payrolls report disappointed.
The most important event of this week will be the meeting of the Reserve Bank of Australia on Tuesday. According to the consensus forecast, the regulator will leave the benchmark rate unchanged at the record low of 1.75% after it cut it in May. The futures market is estimating the possibility of such outcome at 66%. However, it’s worth noting that Australia’s inflation is well below 2-3% target range, so many analysts think that the central bank may still have to cut rate in August. As a result, we don’t recommend long-term bullish positions on Australian dollar, only the short-term longs are possible.
Resistance includes 0.7380 (October and December highs), 0.7450 and 0.7510 (weekly pivots). Support is at 0.7255 (200-day MA), 0.7215 and 0.7170.
From the US dollar side of things, the speech of the Fed’s Chair Janet Yellen later on Monday will determine the market’s expectations for the US rates and, consequently, demand for USD.
Later today after the U.S session at 21:00 GMT will be released the RBNZ monetary & rate Statement, where it's expected to hold the 2.25% which hasn't been changed since March 9th (decreased from 2.50% to 2.25%). The topics that are still concerning to the officials remain the same: weak economic conditions in China, the global concerns about the world's economy and low import prices, which has the inflation into a weakness bias. Latest monetary statement stated that further easing can happen in order to reach the inflation targets.
Around 23:00 GMT, RBNZ is expected to hold a press conference, where possibly the NZD could have a more clear road to follow in charts. The technical picture for NZD/USD at H4 is showing a bullish consolidation above the 200 SMA and a support can be found at the 0.6907 level. If RBNZ monetary policy statement is hawkish, pair could test the resistance zone of 0.7044, but dovish words from RBNZ's officials could give a bear's stampede to the Kiwi, possibly breaking the support zone of 0.6907, toward the 0.6800 psychological level.
On Wednesday, gold futures hit their highest peak in nearly three weeks during the European trading session, as hopes for a summer rate lift kept fading further, thus weighing on the greenback.
In New York, August delivery gold futures soared to a daily high of $1,253.50 per troy ounce, the highest value since May 20.
Traders are pricing in about a 4% probability for a rate lift later this month as well as 27% for July. As for September odds, they reached 44%.
Janet Yellen, Fed Chair informed earlier this week that the Fed is on the verge of lifting interest rates. That’s so sad she provided no timing for this move.
Traders managed to rule out a rate lift at the Fed’s June 14-15 monetary policy gathering right after last week’s American employment data, which revealed the US economy gained the smallest amount of jobs since September 2010.
On Wednesday, the U.S. dollar index, evaluating the greenback’s value against key six currencies, edged down to 93.67, the lowest minimum since May 11.
EUR/USD & Draghi's speech from Brussels: Will the upside be limited?
Today at 07:00 GMT the ECB's president Mario Draghi will speak at Brussels Economic Forum and investors will be aware of the tone that the speech will have, after Draghi decided to keep unchanged the interest rates for June and the European Central Bank started to buy corporate bonds, in an effort to revive the economic growth in Eurozone. Nothing great is expected in today Draghi's words, as it's expected that he still ask to governments to do more in favor of the region's growth.
However, as we saw during last ECB press conference held during last week, market could see some volatility. The H4 chart of EUR/USD shows that the pair is facing a strong resistance around the 1.1415 level and we highlighted with yellow color the move that last Draghi's speech produced on the major pair. A hawkish-than-expected speech will push the EUR/USD to break the 1.1415 zone, toward next resistance at the 1.1484 level, while a dovish or “nothing new” speech from Draghi could trigger a pullback to test the support level of 1.1342, which is very close to the 200 SMA.
Next sell target - 1.0400
AUD/NZD recently broke sharply below the long-term support level 1.0500 (which reversed the previous primary impulse wave ① at the end of October). The breakout of this support level accelerated the active minor impulse wave 3 - which started earlier - when the pair reversed down from the resistance zone lying between the resistance level 1.0700 and the 50% Fibonacci correction of the previous sharp downward impulse from the start of May.
AUD/NZD is likely to fall further in the accelerated intermediate impulse wave (3) toward the next sell target at the support level 1.0400 (target price calculated for the termination of this downward impulse).
After the breakdown of the level 6/8 (0.6958) price without stopping reached overbought zone. Despite the strength of the bulls, the rollback to the area of STD1 did not happen, so the breakdown of marks merger STH4 with the level 0/8 (0.7080) could lead to a further reduction. While the pair does not seek to down and have a chance to test + 1/8 (0.7141) level again. About this signals the reluctance price to go lower STH4, as well as a clear bullish trend with respective colors of both ST.
Next sell target - 152.00
GBP/JPY continues to fall sharply inside the minor impulse wave 1, which belongs to the primary impulse wave ③ from the end of May. The active impulse wave ③ started when the price reversed down from the resistance level 162.00 (which reversed earlier waves 4, (A) and a, as can be seen from the daily GBP/JPY chart below). The price earlier reversed down sharply from the resistance zone lying at the intersection of resistance level 158.00 and 50% Fibonacci correction of the previous downward impulse from May.
GBP/JPY is likely to fall to the next sell target at the strong support level 152.00 (which stopped the previous primary impulse wave ① in April).
GBP/USD: Uncertainty ahead Brexit referendum still weighs on moves
We're one week ahead approximately of Brexit referendum, which will take in place on June 23th, and it seems the odds are favoring to the “Leave” option, according to the most recent polls released by media and independent agencies. The latest headline comes from a poll published during the Friday's US session by ORB Independent, which favors the Brexit with 55% of preference, against a 45% which wants to stay at European Union. After the poll was released, GBP/USD had a decline of more than 100 pips, closing the week at 1.4253, which is telling us that the Brexit sentiment is a strong catalyst that drives the pair nowadays.
The technical picture at H4 chart is calling for a possible double cycle development on the Cable, as it reached the 100% Fibonacci extension (1.4297) from the May 3th highs (1.4685), related with the May 16th lows (1.4331) and May 26th highs (1.4738). However, pair is still doing declines below the 100%, but it hasn't achieved in break the 1.4193 level yet. If GBP/USD does a rebound at current area, then it could test the 1.4392 in the near term, while a breakout below 1.4193, will open the doors for a fall toward 1.4025 level (161.8% Fibonacci extension).
Next sell target - 1.4000
GBP/USD continues to fall inside the minor impulse wave 3, which belongs to the intermediate impulse wave (3) from the end of May. Both of the active impulse waves stared earlier – when the pair reversed down from the resistance zone lying between the resistance levels 1.4750 and 1.4660, as can be seen from the daily GBP/USD chart below. The price earlier broke through the support level 1.4350 (which stopped the previous intermediate impulse wave (1)).
GBP/USD is likely to fall further to the next sell target at the support level 1.4000 (which reversed the earlier intermediate (B)–wave in April).
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