Daily Market Analysis from ForexMart

The EUR/USD pair exhibited a ranging and consolidation during the duration of yesterday’s session. It was a market holiday yesterday in several parts of Europe and Asia, and this is why the market volatility and liquidity levels were on a low during the previous session. In addition, traders are also proceeding with caution since the first week of the month is usually characterized by an influx of economic readings from last month.

These factors were the main reason why the currency pair consolidated within a small range of less than 50 pips. Today could be considered as the legitimate start of the week, and now that there is an expected surge of data coming from last month, the market is expected to undergo some significant volatility for today. The EUR/USD pair ran at 200 pips during the previous week following the results of French national elections, and this is why the currency pair could possibly be subject to corrections, although it has yet to be seen just how significant these corrections would be. The 1.0850 trading range is expected to ward off any corrections at least for the time being while the market waits for the release of economic data this week. The FOMC meeting minutes, the NFP report, and a speech from Yellen will be released within the week which could induce volatility in the pair. However, the market will be looking out for any hints of a Fed rate hike this June and if this does not happen, then the EUR/USD pair could possibly test the 1.1000 trading range.

For today’s session, there are no major economic releases from both the EU and US economy for today, and the EUR/USD pair is expected to undergo a consolidation with bearish undertones for the rest of today’s session.

Yesterday was a very slow trading day for the GBP/USD pair as the market holidays in Europe and Asia left several trading desks vacant, thereby decreasing the amount of market volatility. The currency pair had briefly attempted to test its range highs at 1.2945 points but then eventually dropped in value as the day progressed before finally closing down yesterday’s session at 1.2900 points.

There is little market volatility nowadays in spite of Trump being as crass as usual with regards to his public comments on Twitter regarding US relationships with other countries such as Russia and China, mostly because market players have somehow gotten used to the President’s attitude. As a result, the GBP/USD pair was largely affected since it still has no definite course of action as of late. However, it is only a matter of time before the expected surge of economic data which usually occurs during the first week of a new month. The GBP/USD pair is expected to exhibit more consolidation until all the scheduled economic reports are released within the week, starting from the FOMC minutes this coming Wednesday.

For today’s session, the UK economy will be releasing its Manufacturing PMI data during the EU session, with the said reading expected to follow the recent slew of positive economic data from the region during these past few months. If this indeed happens, then the cable pair could possibly test its range highs yet again within today’s session.

The U.S. dollar against the Canadian dollar broke at 1.37 level during the Tuesday session. The oil market is not performing well which pulls the Canadian dollar along. The psychological level between 1.3.63 and 1.37 is strongly resistive as seen in the weekly chart which may not be favorable in selling the pair.

Besides oil concerns, the Canadian housing market is along being problematic particularly in Toronto and Vancouver area. There is a bubble market over the summer housing market with some of the shadow lenders starting to be affected as it drops to lows. This put the currency under pressure added to the oil market which complicates the situation further.
Pullbacks in the trend could open buying opportunities for the pair with the target of 1.40 level and may reach even up to 1.45 which is already expected for this summer.

However, if the pair breaks lower than the 1.36 handle, it is a sign to sell the pair but could be far from happening. Traders should catch on pullbacks which is would be a wise decision for this pair considering the oil market to trigger the pair to break lower.

The EURUSD remained steady on its position as it trades in a comparably tight range regardless of the massive data from the European region such as unemployment and PMI.

While the agreement made in Greece together with IMF and EMU is expected to maintain the pair in a higher stand.

While central bankers were on the news and brought challenges towards Mario Draghi in pursuing a dovish sentiment. The pair extends its consolidation on the first day of Europe’s long weekend and created a bull flag pattern which serves as the pause to stimulate.

Traders are anticipated to postpone its action prior to the U.S Non-Farm Payrolls scheduled on Friday or the fulfillment of second-round election in France preceding the major to reach its renewed highs.

Resistance lies at 1.0955 close on its previous week’s high while the support came in at 1.0843 next to the 10-day moving average.

The momentum kept a favorable stance since the MACD were printed in black along with an upward sloping path reflected in the histogram. This event had influenced to the advancing positive trajectory pointing to a greater exchange rate.

An upward trend of the Relative Strength Index is seen at 67 posted on the upper side of the neutral range.

The USD had a very positive trading session yesterday as a result of a positive economic dollar-related news. This then helped the dollar to eclipse the value of other currencies, and the EUR/USD pair was no exception. The currency pair had started out yesterday’s session on a somewhat slower pace as the market anticipated the release of important economic readings and had spent the majority of yesterday trading within its range highs. However, as the said financial data started coming in, the dollar was able to capitalize on this slew of good news and prop itself up higher, putting significant downward pressure on the currency pair which is now trading at just under 1.0900 points.

The first bit of good news came in the form of the ADP employment report, which surprisingly came out as expected, considering the fact that last month’s NFP report had failed to meet market expectations. Up next was the manufacturing report which also came out as positive, and this increased the USD’s value even more. However, by this point, the dollar was still somewhat at par with the value of the euro since the market chose to standby for the release of the FOMC meeting minutes. The said minutes were released halfway during the NY session, and since there was no accompanying press conference the market had no choice but to pick on the results of the minutes itself. The Fed did not give any indication of the schedule of the next rate hike, however it pointedly ignored the somewhat tame economic growth in the Q1, which the market took as a signal that the central bank might be preparing for another June rate hike. This triggered a dollar buy which pushed down the EUR/USD pair towards under 1.0900 points.

As of this point, the market is starting to price in a June rate hike although there are still no definite hints as of the moment. For today’s session, the market is expecting the release of the US unemployment claims data while Draghi will be speaking during the latter part of the NY session. There is little volatility expected today as the NFP report is due to be released tomorrow. The EUR/USD pair is expected to trade with bearish undertones for the rest of today’s sessions.

The GBP/USD pair was unable to move past its resistance level of 1.2950 points, causing the pair to retreat under this region where it is currently situated. The construction PMI data was released yesterday, and this particular bit of data had exceeded initial market expectations, adding up to the string of positive economic data coming in from Tuesday’s session. These series of data was able to help keep the sterling pound under its bid price and traded in a relatively steady trading manner during the first few hours of yesterday’s session.

The ADP employment report as well as the non-manufacturing data came in next, and these helped to further strengthen the stance of the USD as they both were able to meet expectations. The FOMC minutes were then released hereafter, wherein members of the central bank chose to snob the results of the Q1 GDP data, which was taken as a bullish mark for the USD since a large-scale buy was triggered during the NY session. The GBP/USD pair then plummeted through 1.2900 points and is now trading at 1.2875 points. The pair’s support levels are situated at 1.2850 points and since the NFP is expected to come in during yesterday’s session, the cable pair is expected to be able to maintain its hold on this particular region while it continues to consolidate.

For today’s session, we have the UK economy’s services PMI data as well as the US economy’s unemployment claims data, both of which are expected to induce volatility in the currency pair. The market is not expected to have much activity today as there is an influx of economic data scheduled for tomorrow.

The USD/JPY pair traded just within the reaches of its six-week high as the Fed refused to remove the possibility of a June rate hike, although the country’s economic growth weakened during the previous quarter. The Fed chose to maintain its current interest rates and had highlighted the positive outlook for the labor market during its two-day meeting, which could possibly be an indicator that at least two more interest rate hikes are scheduled to be carried out within the year. The USD/JPY pair closed down the previous trading session at 112.759 points after increasing by +0.69% or 0.0770 points.

The current Fed statement and the previous statement do not have any stark contrasts except for the central bank choosing to ignore the GDP data this time. The futures markets are now pricing in a 93% probability that the Fed will be implementing an interest rate hike this coming June. The next FOMC meeting is set on June 13-14 which will be followed by a press conference from Janet Yellen. Based from the Fed’s meeting minutes released yesterday, the Fed could possibly raise its interest rates by up to 25 basis points up to three times in a row before the year ends. If this indeed happens, then the US dollar would eventually become a very attractive and a very lucrative investment for market players.

For today’s session, market volatility will not be expected to to increase since the majority of market players will be saving their energies for the release of the NFP report this Friday.

The New Zealand dollar dropped during the Thursday session. The market has gone bearish because of the commodity market and the jobs data to be released. Traders should not forget that the price trend for the kiwi dollar would be influenced by the commodity market. The current trend could go higher reaching the 0.68 handle and short-term surge would mean selling opportunity. If the price breaks lower than the psychological level, the price would go downward instead. Traders should anticipate high volatility in the market but would be favorable for the U.S. dollar since the awaited jobs data to be released today.

The Future market also influences the currency although would not be directly influenced with any market. One could find a correlation between milk futures and the kiwi although it would not do much since the liquidity isn’t that high. The safe way is to compare with other commodities to determine how this currency will move and its overall tone in the market and wait for a short-term surge. It is possible to reverse the trend when it breaks higher than the 0.69 level and turn bullish as a follow through and climb higher.

The New Zealand dollar against the U.S. dollar initially rallied for the past week. The 0.69 level was seen to give significant resistance which hints the possible continuation of the uptrend. However, this is not a good indication for commodities which highly influences the currency. On a good side, the crude oil surge for a while during the Friday session. Yet, the commodity market could remain subdued which would then decreased the demand for kiwi. It won’t take long that this pair would further decline. If the pair breakdown lower than the 0.6850 level, the next level would be at 0.67.

Short-term rallies for this pair opens more opportunities which will soon push forward. The pair hovers at 50% Fibonacci retracement level and it is anticipated to have a lot of noise down beloW. However, if the pair breaks down from the expected level, this implies that the pair is not strong enough.

On the other hand, if the pair breaks more than the 0.7030 level, the price could extend up to 0.73 handle or higher. The pair is much more directed to the go downward instead. Traders should look out for commodity market which will influence the currency in the next trading sessions and it may be difficult to go long for long-term in this pair.

The British pound paired with the Japanese yen rallied during the Tuesday session. The market reached the 147.50 level and tries to reach the 148 handle. There is still a lot of space to climb higher towards the next target of 150 handle. Later on, the 147 level could become a support level.

Amongst a basket of currencies, the Japanese yen sells off the most and sensitive to risk appetite as a whole. Traders should not forget the pair to be volatile and long-term deals is predominant in traders.

The market should also monitor the stock market which is performing well relative to indices such as the S&P 500. Although, traders should expect volatility as it climbs higher and it seems that there is sufficient buying pressure to push the price higher. Nevertheless, reversals open opportunities to gain for this pair, especially for yen related market. It may not be advisable to sell this for now with buyers leading the market. There is still risk appetite which could induce the pair to further go up.