EUR/USD: waiting for NFP _06/05/2016

Trading recommendations

Sell ​​Stop 1.1370. Stop-Loss 1.1420. Targets 1.1325, 1.1285, 1.1260, 1.1180

Buy Stop 1.1440. Stop-Loss 1.1390. Targets 1.1485, 1.1535, 1.1615, 1.1700, 1.1900


Technical analysis

At the end of the previous month, the EUR / USD rose on the weak macro data from the US and positive evidence of the growth in GDP and reduction in unemployment in the euro area. Since the beginning of the month the pair has continued, and on Tuesday the pair reached new yearly highs near the 1.1615 mark. However, on Tuesday at the daily chart of EUR / USD pair formed a pin-bar, and the price dropped another 110 points to the support level 1.1380 (February highs).

With the opening of the European session the dollar loses slightly against the euro, yen and gold. Apparently, investors before the publication of today's NFP withdraw funds to safer assets.

The pair remains within the rising channel on the daily and weekly charts near the upper limit of the level of 1.1785 (Fibonacci level of 38.2%).

Indicators OsMA and Stochastic on the 4-hour and daily charts paint a contradictory picture. If the daily chart indicators recommended sale, the 4-hour chart indicators are deployed on long positions. In case of weak data on the labor market, the EUR / USD will continue to rise. After the break level 1.1485 (highs October 2015) is possible further growth of the pair to levels of 1.1615, 1.1700, 1.1785 (38.2% Fibonacci level), 1.1900 (EMA144 on the weekly chart).

If data will be better than expected, then the EUR / USD pair will go down. Levels of support in such a case, perform the levels of 1.1380, 1.1325 (EMA200 on 4-hour chart), 1.1285 (23.6% Fibonacci level of the correction to the last wave decline from 2014 highs of the year), 1.1220 (EMA50 on the weekly chart), 1.1180 (EMA200 the daily chart).

Fixing prices below 1.1180 will return the EUR / USD pair in the downtrend.

Support levels: 1.1380, 1.1325, 1.1285, 1.1260, 1.1220, 1.1180, 1.1100

Resistance levels: 1.1460, 1.1485, 1.1535, 1.1615, 1.1700


Overview and Dynamics

The focus of investors and traders today are data on the number of new jobs created in the non-farm payrolls and US unemployment rate for April, which will be released at 12:30 (GMT). According to the forecast it is expected to increase by 200 000 new jobs (compared to 215,000 in March).

According to the presented on Wednesday by ADP, the number of jobs in the private sector in April increased by 156 000 (estimate was 196 000). The number of initial claims for unemployment benefits rose to a 5-week high in the US, but, as stated on Thursday the Ministry of Labour, still corresponds to the general trend of the strengthening of the labor market.

If NFP data will be confirmed, or better than expected, the dollar strengthened across the financial markets.

Nevertheless, some positive labor market data are limited to the Federal Reserve came to the conclusion about the need to increase interest rates in the United States. Most economists expect rate hikes until September, if any take place this year.

However, combined with the acceleration of core inflation, the strong labor market data may still convince the central bank to the need to tighten monetary policy.

As said on Thursday the president of the Federal Reserve Bank of Dallas, Robert Kaplan, in an interview with Wall Street Journal, «... if for the 2nd quarter data on consumer spending will be stronger and the progress in the implementation of obligations under the dual mandate to continue", he will play for the rate increase in June or in July.