USD Bullish Ahead of Non-Farms Report

The US dollar saw gains against most of its main currency rivals before markets closed for the weekend on Friday, as concerns regarding Spanish debt continued to boost safe-haven currencies. Worries about Spain were also largely responsible for losses that both crude oil and gold took for the day. This week, all eyes will be focused on Friday’s US Non-Farm Payrolls report. With analysts predicting only a mild improvement over last month’s jobs figure, the USD may have a hard time maintaining its recent gains in the coming days. Additionally, traders will also want to pay attention to US manufacturing data today and the euro-zone Minimum Bid Rate on Thursday.

Forex Market Trends

Daily Trend up up down down up up
Weekly Trend down down down up down up
Resistance 1.2938 1.6240 78.81 0.9518 1.0453 0.8059
1.2892 1.6188 78.33 0.9471 1.0408 0.8011
1.2865 1.6156 78.06 0.9442 1.0380 0.7982
Support 1.2819 1.6102 77.59 0.9395 1.0333 0.7935
1.2792 1.6069 77.32 0.9366 1.0305 0.7906
1.2747 1.6017 76.84 0.9319 1.0260 0.7858

Economic News

USD – US Manufacturing Data Could Help Dollar Today

The US dollar was largely bullish against its main currency rivals on Friday, as euro-zone worries boosted safe-haven currencies. The USD/CHF gained more than 80 pips during European trading to trade as high as 0.9414 before experiencing a minor downward correction. The pair eventually closed out the week at 0.9400. Meanwhile, against the Japanese yen, the greenback was able to correct some of its losses from earlier in the week. The USD/JPY advanced close to 70 pips before peaking at 78.10 during afternoon trading. The pair finished out the day at 77.86.

Turning to this week, while investors will be eagerly awaiting Friday’s all-important US Non-Farm Payrolls figure, traders will not want to forget that there are other potentially impacting news events scheduled for the coming days. Today’s US ISM Manufacturing PMI is forecasted to show growth in the manufacturing sector from last month, which if true, could help the dollar extend Friday’s gains. Attention should also be given to a speech from the Fed Chairman today, the ISM Non-Manufacturing PMI on Wednesday and Thursday’s FOMC Meeting Minutes.

EUR – Span Worries Continue to Drive Euro Lower

The euro extended its recent bearish trend on Friday, as concerns regarding Spanish debt resulted in additional risk aversion among investors. The EUR/USD fell well over 100 pips for the day, eventually reaching as low as 1.2826, not far from a recent 2 ½ week low. The pair was able to finish out the week at 1.2853. Against the British pound, the euro started off the day on a strong note, gaining close to 50 pips to trade as high as 0.7993. That being said, a downward correction during afternoon trading erased all of the euro’s earlier gains. The common-currency closed the day at 0.7955.

This week, euro traders will want to continue monitoring developments out of Spain. Any sign that Spain is getting closer to requesting a bailout package from the ECB may boost the common-currency. In addition, Thursday’s euro-zone Minimum Bid Rate and ECB Press Conference are likely to provide important clues regarding the current state of the euro-zone economic recovery. Positive signs could help the euro recover some of its recent losses.

Gold – Gold Falls amid Risk Aversion

Risk aversion among investors due to uncertainties regarding Spain’s debt situation weighed down on the price of gold on Friday. Overall, the precious metal fell more than $15 an ounce to trade as low as $1767.07 during afternoon trading. A minor upward correction brought prices to $1771.80 before markets closed for the weekend.

This week, gold traders will want to pay attention to a batch of euro-zone and US news for clues as to the level of risk appetite among investors. Gold may recoup some of Friday’s losses if it appears that Spain is closer to requesting a bailout package. That being said, any better than expected news out of the US could lead to dollar gains, which may further weigh down on the price of gold.

Crude Oil – US Data Set to Impact Oil Prices

After falling more than $1 a barrel during the first half of the European session on Friday, crude oil was able to stage a modest recovery during the afternoon and evening sessions. The commodity traded as low as $91.37 before bouncing back to $92.44. Crude eventually finished out the week at $91.97.

This week, oil traders will want to monitor a batch of US news, most importantly Friday’s Non-Farm Payrolls figure. Additionally, the ISM Manufacturing PMI and Non-Manufacturing PMI and FOMC Meeting Minutes could all potentially have an impact on the price of oil. Better than expected news may signal to investors that demand for crude in the US will go up, which could boost prices.

Technical News

While the Williams Percent Range on the daily chart has crossed over into oversold territory, most other long-term technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.
A bearish cross has recently formed on the weekly chart’s Slow Stochastic, indicating that a downward correction could occur in the coming days. Furthermore, the Williams Percent Range on the same chart has crossed over into overbought territory. Opening short positions may be the smart choice for this pair.
In a sign that upward movement could occur in the near future, a bullish cross appears to be forming on the daily chart’s MACD/OsMA. That being said, most other technical indicators on the daily and weekly charts show this pair range trading. Taking a wait and see approach may be the smart choice.
A bullish cross has formed on the weekly chart’s Slow Stochastic, signaling that this pair could see an upward correction in the coming days. Furthermore, the Williams Percent Range on the same chart is very close to dropping into oversold territory. Traders may want to open long positions for this pair.

The Wild Card

The Bollinger Bands on the 8-hour chart are narrowing, signaling that a price shift could occur in the near future. Additionally, a bearish cross has formed on the same chart’s MACD/OsMA. This may be a good time for forex traders to open short positions ahead of a possible downward correction.

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