Today is an important day on the economic calendar, with a mix of PMIs, inflation and US payrolls data. The UK Services PMI kicks off the tier one data at 8:30 GMT and is anticipated to grow to 50.5 from last month’s extremely frustrating 48.9 which was the lowest since July 2016.
The Eurozone flash inflation for April is at 9:00 GMT and is expected to show headline HICP improving to +1.6% (from +1.4% in March), while core HICP is expected to also tick higher to +1.0% (from March’s +0.8% which was an 11 month low).
The chief economic event of the day will be the US Employment Report for April which is at 12:30 GMT. Headline Non-farm Payrolls are anticipated to slide back a bit to +185K (from previous month’s +196K). Well, I’m not going to take much time discussing NFP and its forecast, so let’s swiftly move towards technical analysis and trade setups.
EUR/USD – Bears Taking Control ahead NFP
The EUR/USD pair fell from the double top high of 1.1218 on the back of modest upward revisions to manufacturing output in the Union, although. As per Markit, growth in the sector remained in contraction territory, with the final April PMI resulting in 47.9. German index, registered 44.4 in April barely up from March’s low of 44.1, also in contraction territory.
The interest for the bulls is that the EUR/USD is now pulling back under the old critical support level of $1.1175 which had become a pivot. The RSI below 40, MACD lines accelerating lower and negative traction on Stochastics would be bearish signals.
Closing of a 2-hour candle below $1.1175 opens further room for sellers until the key April low of $1.1110 and beyond that towards $1.1000.
Whereas, resistance seems to have formed at $1.1265 as another potential lower high. Initial resistance at yesterday’s rebound high of $1.1220. A strong payrolls report today could see new multi-month lows.
Key Trading Level: 1.1187
GBP/USD – Testing 20, 25 and 50 EMA, Is It Going to Bounce Off?
Cable has held up exceptionally well because the Fed was somewhat more hawkish than assumed and the Bank of England was cautious.
What is the reason?
Well, the Brexit expectation of a political deal between the Government and Labour. The market still regards this as a supportive factor, and $1.3000 always seems to be psychological support.
Today, it was a relatively quiet session for Cable. Resistance prevails around $1.3100/$1.3130, but for now, the bulls are prepared to defend $1.3000.
Technically the RSI has spent much of the week stabilizing around 50. Moreover, a revival in Stochastics and MACD appears to be running out of steam. Today on Friday, the Payrolls may provide the market with some legs today, but in the absence of newsflow on Brexit, it is unlikely to be a decisive move.
Key Trading Level: 1.3045
Let’s keep a close eye on 1.300 support area as the violation of this can trigger a sharp sell-off until 1.2985 and 1.2946. While bulls are likely to stay in power above 1.3000. Have a profitable, see you with another trade setup. Stay tuned…