Trading plan for 02/06/2017:
Strong data from ADP and ISM are supporting the US Dollar, but the market is in the waiting mode ahead of the key event of the week, Non-Farm Payrolls report. USD/JPY climbs above 111.50, followed by the Nikkei breaking 20,000 for the first time since December. Gold weakens under strong Dollar pressure and WTI crude oil is unable to hold higher.
On Friday 2nd of June, the event calendar is busy with important news releases, so global investors will pay attention to PMI Construction data from the UK, Producer Price Index from the Eurozone, Trade Balance from Canada and Unemployment Rate and Non-Farm Payrolls data from the US.
EUR/USD analysis for 02/06/2017:
The key event of the day is the US job market data scheduled at 12:30 pm GMT. Market participants expected the Unemployment Rate to stay unchanged at the level of 4.4% and the Non-Farm Employment Change to drop from 211k jobs to 181k jobs. Nevertheless, besides the headline Non-Farm Payrolls data, market participants will take notice of the Average Hourly Earnings that should decrease from 0.3% to 0.2% and Participation Rate that should remain close or above 62.9%. The expected NFP figure would be close to the average monthly gain seen during the past couple of years, and certainly, enough for the Federal Reserve to view the labour market as healthy and still improving (which in turn justifies the interest rate hike). On the other hand, wages keep improving, but there are no signs of upward pressure for wages to rise more. Moreover, the latest inflation reading was below expectations and remains a concern for the FED. If today's data beats the expectations, then the US Dollar will have a chance to rally across the board.
Let's now take a look at the EUR/USD technical picture on the H4 time frame. Currently, the price is trading sideways as it awaits the NFP data. If the NFP beats the expectations, then a sell-off is expected towards the technical support at the level of 1.1108. If the NFP report is worse than expected, then EUR/USD might rally towards the nearest technical resistance at the level of 1.1266 and 1.13000 and even higher.
Market snapshot: GBP/USD fails to rally again
The bulls were trying to break out above the golden trend line resistance again, but they failed and now the price is turning back towards the level of 1.2828. The level of 1.2920 is the key technical resistance for the price. As long as the price trades below it, the chances for another sell-off are increasing.
Market snapshot: Gold fails to extend the rally
The price of Gold has broken above the technical resistance at the level of 1,270, but the breakout was false and short-lived. Currently, the price is trading near the important support at the level of 1,259. If this level is clearly violated, then the next technical support will be seen at the level of 1,245. Please notice the clear bearish divergence between the price and the momentum oscillator that supports the bearish bias.
