INTRADAY TECHNICAL ANALYSIS 7 MAY (observation as of 05:20 UTC)
[EURUSD]
Important Levels to Watch for:
- Resistance line of 1.20926 and 1.21235.
- Support line of 1.19926 and 1.19617.
Commentary/ Reason:
The euro was little moved on Friday, having gained 0.5% overnight. The currency last stood at $1.20647 ahead of the U.S. payrolls data later today.
U.S. payrolls data, due at 1230 GMT, is expected to confirm the economy’s solid path to recovery from the pandemic, with economists expecting 978,000 new U.S. jobs for April.
Signs of strong job recovery, however, are something of a double-edged sword for markets. They could boost risk appetite and weigh on the safe haven dollar. But if they stoke inflation worries and lead to expectations of reduction in the Fed’s stimulus, it may boost U.S. bond yields and the dollar.
The EUR/USD has once again rebounded from the 1.199 support level and descending trendline as buyers are unwilling to give way to bearish sentiment. The current trading range is therefore likely to remain intact in the near-term.
[USDCHF]
Important Levels to Watch for:
- Resistance line of 0.91445 and 0.91747.
- Support line of 0.90470 and 0.90169.
Commentary/ Reason:
The dollar traded slightly higher against the Swiss franc on Friday, to trade at 0.90727, although the pair trended in descending trendline and recorded a new 1-month low earlier today.
The dollar was weighted by the inflation worries, lower U.S. Treasury yields and expectations of reduction in the Fed’s stimulus. The U.S. payrolls data is awaited, set to be released later today.
Meanwhile asset tapering talks, and increased risk aversion following surging COVID-19 cases, lent support to the U.S. dollar.
[GBPUSD]
Important Levels to Watch for:
- Resistance line of 1.39501 and 1.39833.
- Support line of 1.38426 and 1.38093.
Commentary/ Reason:
The British pound traded at $1.39054, rose 0.17% on Friday.
A decline in T-note yields boosted the pound.
The gains also were bumped by the Bank of England decision to slow the pace of its trillion-dollar of its bond-purchasing programme. The decision was largely expected, and the BoE stressed it was not reversing its stimulus.
The British currency, however, is capped for now by uncertainties over a Scottish election that could trigger a showdown with British PM Boris Johnson over its independence movement, where the result is expected to be on Saturday.
The U.S. monthly jobs report that set to be released later today will determine the next price actions. The data is expected to show that nonfarm payrolls increased by 978,000 jobs last month.
The latest GBP/USD oscillations are narrowing into a symmetrical triangle, where typically a breakout will take place. Given the pattern, the breakout can be either bullish or bearish. Longer-term sentiment has been bullish.
