On the
daily chart below, we can see that the big bullish wave in USDJPY stalled a few
days ago as we reached peak hawkishness and then got an unwind due to some Fed members hinting to a pause in
June. The bias remains bullish though as the price would need to break below
the upward trendline to change the trend and make the moving average to cross
downwards. Right now, we can see that USDJPY is approaching a nice support
level at 138.16 where we can also find the red 21 moving average.

USDJPY Technical
Analysis

On the 4
hour chart below, we can see that the price was already signalling weakness in
the bullish momentum as the price started to diverge with the
MACD into the
140 handle. Once we got the breakout of the rising channel and the moving
averages crossed to the downside, USDJPY just kept on falling also helped by yesterday’s
softness in the ISM Manufacturing PMI and Unit Labour Cost reports.

The
buyers are likely to lean on the 138.16 support where we can find the 38.2% Fibonacci retracement level.
However, if we get a break to the downside and the price falls more, we will
have an even stronger support near the 137 handle where we have the confluence of the
trendline and the 61.8% Fibonacci retracement level.

On the 1
hour chart below, we can see that the short-term trend is bearish as we are
making lower lows and lower highs. As long as USDJPY doesn’t break above the
downward trendline, the bearish trend remains intact. So, as highlighted
before, we have 3 different entry opportunities for the buyers:

• More
  aggressive buyers should lean on the 138.16 support and the
  38.2% Fibonacci retracement level with a defined risk just below it.
• If this
  support fails, they can try again at the upward trendline and the
  61.8% Fibonacci retracement level.
• More
  conservative buyers, may want to wait for the price breaking above the downward
  trendline to join the bullish wave and target the 142 handle.

The
sellers, on the other hand, are likely to pile in at every breakout:

• If the
  price breaks below the 138.16 support, the sellers will jump onboard to ride
  the selloff into the trendline.
• On a
  break below the upward trendline, the sellers will pile in more aggressively as
  the trend is likely to change at that point and the target will be the 127.20
  low.

The spotlight today will be
on the US NFP report, with various potential scenarios that could unfold:

• If
  the data surpasses expectations, along with higher-than-anticipated average
  hourly earnings, it is likely to increase the chances of a rate hike in June
  and perhaps even price in some probability of a rate hike in July. This
  particular scenario may raise concerns within the market regarding a possible wage
  price spiral.
• Conversely,
  if the data is positive but falls short of expectations in terms of average
  hourly earnings, it is expected to further weaken the USD, as it would not have
  a significant impact on rate expectations and could even trigger soft landing
  vibes.
• If
  the data falls short of expectations across the board, it will be viewed as
  negative news and could potentially induce risk aversion in the markets,
  leading to lower Treasury yields and more bids in JPY. Moreover, based on
  recent comments from Fed officials, we might witness the USD weakening also due
  to diminished expectations of future interest rate hikes.

This article was written by ForexLive at www.forexlive.com.

Fed funds futures are showing roughly 71% odds of the central bank not hiking rates in June now. Mind you, it was roughly 70% in favour of a rate hike at the start of the week. That’s a complete U-turn in terms of pricing as Fed policymakers delivered a somewhat coordinated message that they might very well „skip“ a rate hike this month.

And when you consider the balance of the situation now, the risks seem to be favouring further downside for the dollar rather than any major upside as we head into the US jobs report later today.

In the event that the numbers are strong and we get a solid report, it just once again reaffirms that labour market conditions are holding up well. That doesn’t really take away from the messaging that policymakers might „skip“ a 25 bps move in two weeks‘ time.

In case there is some reason that the labour market is running extremely hot, perhaps we might see some last-minute message by Fed speakers before the blackout period tomorrow. But barring any major surprise, the data should just reaffirm that things are solid and the Fed already knows that by now.

So, to deliver a message as they did in the past two days, does say a lot about what the line of thinking is. Of course, we could see other policymakers besides Harker come out to provide a rebuttal later today but then that will come after the jobs data.

Going back to the report, if there is going to be a downside miss on the numbers and wage pressures ease, that will likely pile on the misery for the dollar. If policymakers are now talking about a „skip“, such data might even turn that into talk of a „pause“.

In other words, it’s all about measuring the strength of the Fed pivot now.

Even with a decent set of numbers, the Fed is still going to move to the sidelines and reassess the situation again in a month’s time. But if there is some shakiness in the jobs report and then softer CPI figures later this month, that could really set off some alarm bells for dollar bulls to go cowering.

This article was written by Justin Low at www.forexlive.com.

On the
daily chart below, we can see that May was a great month for the USD as the
strong economic data made the market to reprice interest rates expectations on
the more hawkish side. We even got a breakout of the March low recently, but
the sellers couldn’t sustain the momentum as they started to get big headwinds.
In fact, NZDUSD rallied in the past two days as the market started to unwind
hawkish bets due to some Fed officials
talking about a pause in June to wait for more data and decide in July.

Moreover,
yesterday’s soft data in the ISM
Manufacturing PMI and Unit
Labour Cost reports supported the idea of a pause in June. If the next set
of data doesn’t surprise to the upside, then we should see NZDUSD rallying all
the way towards the 0.6181 level where we can find confluence
from the trendline,
the 61.8% Fibonacci
retracement level and the red 21 moving
average.

NZDUSD Technical
Analysis

On the 4
hour chart below, we can see that we had already some signals of a weakening
bearish momentum from the price divergence
with the MACD.
Sure enough, we got a pullback, that may even become a reversal if the data
starts to disappoint.

The
buyers’ target is of course the 0.6181 resistance
and the cross to the upside of the moving averages is currently supporting the
idea of another wave of buying pressure to come. If NZDUSD reaches the 0.6181
resistance, we can expect the sellers leaning on that level with a defined risk
just above the resistance to target a break below the 0.5985 low.

On the 1
hour chart below, we can see that we have a bullish structure at the moment
with the last higher low standing at the 0.6058 level. This zone between the
0.6058 and 0.6084 coupled with the red 21 moving average will be the buying
area for the buyers with a stop just below it. The sellers, on the other hand,
will want to see the price to break through that zone to pile in and extend the
selloff into the 0.5985 low first and the 0.5820 level next.

Today, the attention will
be on the NFP report, and there are several potential outcomes to consider:

• If
  the data surpasses expectations, accompanied by higher-than-anticipated average
  hourly earnings, it is likely to increase the likelihood of a rate hike in June
  and potentially even signal the possibility of a rate hike in July. Such a
  scenario could raise concerns in the market regarding a potential escalation of
  wages and prices.
• On
  the other hand, if the data is positive but falls short of expectations in
  terms of average hourly earnings, it is expected to exert further downward
  pressure on the USD, as it would not significantly affect rate expectations. In
  this case, market participants will eagerly await the forthcoming CPI report,
  scheduled for next week.
• Should
  the data disappoint across all aspects, it will be regarded as negative news
  and could potentially prompt risk aversion in the markets, leading to an
  increased demand for the USD. However, given recent remarks made by Federal
  Reserve officials, we might witness a weakening of the USD due to reduced
  expectations surrounding future interest rate hikes.

This article was written by ForexLive at www.forexlive.com.

• SNB ready to be active in forex markets to ensure appropriate monetary conditions
• Inflationary pressure is broadening
• Cannot sound the all clear on inflation despite recent dips in the data

With the ECB still on the tightening path, the SNB is also maintaining its approach for the time being. The next policy decision for the Swiss central bank will be on 22 June, so mark that down on your calendars.

This article was written by Justin Low at www.forexlive.com.

• Likely to see another rate hike at the next meeting
• Inflation fall is very welcome but not definitive
• Underlying pressures are still quite strong

He also says that they have not yet reached the moment where they can put a stop to rate hikes just yet. Once again, it’s a relatively consistent message all around from the ECB so far this week.

This article was written by Justin Low at www.forexlive.com.