The most recent NFP report, released last Friday, once again
outperformed expectations, extending its impressive winning streak to 14. However,
upon closer analysis, the report revealed some less favourable details. The
unemployment rate experienced a significant increase from 3.4% to 3.7%, marking
the largest month-over-month jump since the pandemic began. Additionally, there
was a slight decline in the average workweek hours, which could indicate
potential layoffs being considered by employers. Overall, the report provided a
mix of information that could be interpreted differently by individuals.

Shifting focus to the US ISM Services PMI, it came in considerably lower than
anticipated at 50.3, narrowly missing the threshold for contractionary
territory. The employment sub-index indicated a contraction, while the prices
paid sub-index saw a substantial decrease, returning to levels last observed in
May 2020. As a result, the market responded by further reducing the likelihood
of additional interest rate hikes by the Federal Reserve (Fed).

Furthermore, the recent
surprising rate hikes by the RBA and the BoC may have influenced risk
sentiment, leading to concerns that the Fed might follow suit. However, it is
unlikely given that the Fed typically aligns its actions with market pricing,
and we should also take into account that the CPI report has not yet been
released.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, the GBPUSD is trading again
within the range between the 1.2340 support and
1.2530 resistance. Just a week ago it looked like the pair was topping out as
we also had the Head and Shoulders pattern
as an extra bearish signal, but now that the moving averages are on
the verge of another crossover to the upside, the bias is murkier. Maybe this
was just a bigger and more complex pullback.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, the levels to watch are of
course the resistance and support of the range. Given the uncertainty in the
markets, it may be better to wait for a breakout supported by a fundamental
catalyst. The buyers, should pile in if the price breaks above the 1.2550
level, while the sellers should jump onboard in case the price breaks below the
1.2300 handle.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see the short
term price action within the range and we can notice that there isn’t much to
glean from this chart as support and resistance levels are confusing as they
generally are in rangebound markets. There’s just a possible trendline where
the price may bounce off of or break through and give the buyers and sellers an
extra opportunity to enter in line with their biases before the actual range
breakouts.

The US
Jobless Claims report is worth monitoring today in terms of potential risks,
although its impact on the market is not anticipated to be substantial unless
there are significant deviations from the expected number:

• If the
  report exceeds expectations by a significant margin, it could spark some
  hawkish expectations in the market. This could suggest that inflation may
  remain elevated due to a tight labour market, potentially influencing the
  market’s outlook.
• Conversely,
  if the report falls short of expectations by a significant margin, it
  should reaffirm the Federal Reserve’s neutral stance. Unless accompanied
  by a high Consumer Price Index (CPI), the market might even factor in the
  end of the interest rate hiking cycle.

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

A little higher, a little lower, and all around we go. That’s the mood in markets this week as we continue the slow countdown to the US CPI and Fed decision next week. The dollar is now slightly lower on the day as major currencies are stretching their previously narrow ranges in European morning trade.

EUR/USD is up 0.3% to 1.0730 after hanging around near 1.0700, with large option expiries in play at the figure level. USD/JPY remains down 0.2% to 139.80 and not much changed from Asia trading, as large option expiries at 140.00 are also serving to contain price action despite slightly higher Treasury yields.

Elsewhere, the dollar is seeing light declines against the pound and loonie, with the latter looking to contest key support as outlined earlier here. The antipodeans are holding higher with some improvements in the risk mood as Nasdaq futures are now up 0.1% after having been down around 0.3% to start the session.

AUD/USD is up 0.5% to 0.6680 levels but continues to stay below key resistance from its 200-day moving average at 0.6690 for now:

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

The latest NFP report, released last Friday, once again
exceeded expectations, extending its impressive winning streak to 14. However,
upon closer examination, the report didn’t present particularly favourable
details. The unemployment rate saw a significant increase from 3.4% to 3.7%,
marking the largest month-over-month jump since the pandemic began.
Additionally, the average workweek hours showed a slight decrease, which is
often an indication that employers may be considering layoffs. All in all, the
report contained a mix of information that could be interpreted differently by
different individuals.

Moving on to the US ISM Services PMI, it came in much lower than
anticipated at 50.3, narrowly missing the threshold for contractionary
territory. The employment sub-index reflected a contraction, and the prices
paid sub-index experienced a substantial decrease, returning to the levels seen
in May 2020. Consequently, the market responded by further discounting the
possibility of additional interest rate hikes by the Federal Reserve (Fed).

Moreover, recent surprising
rate hikes by the RBA and the BoC may have influenced risk sentiment, leading
to concerns that the Fed might follow suit. However, it is unlikely given that
the Fed typically aligns its actions with market pricing, and we should also
consider that the CPI report has not yet been released.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, the EURUSD seems to be
bottoming out at the key 1.07 support level as
the price started to range around it and the market priced out hawkish
expectations for the June meeting. The bias remains bearish as the moving averages have
crossed to the downside and the trend is still downward. The possible double top at the
1.1033 high might indicate that we still have some room to the downside to
touch at least the 1.0533 neckline, but watch out for the price action in the
following days and after the CPI and FOMC next week.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, the price has broken out of
the falling channel as it started to range around the 1.07 support. The
resistance at 1.0760 stalled the rally after some Fed members hinted to a pause
in June. The selloff that came soon after was caused by the NFP report, but as
we mentioned previously, it wasn’t such a great deal and the EURUSD restarted
its rangebound price action.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a little box here where the EURUSD got stuck since the start of the week.
A breakout on either side may trigger some big moves but the levels to watch
should be the 1.0760 resistance and the 1.0635 support. If the buyers manage to
break above the resistance, then we may see the rally extending towards the 1.0845
level. On the other hand, if the sellers manage to break below the support, we
should see EURUSD trading at 1.0533 soon after.

The US Jobless Claims
report is the event to keep an eye on today in terms of risks, but its impact on the
market is not expected to be significant unless there are major deviations from
the expected number:

• If
  there is a significant beat in the report, it could trigger some hawkish
  expectations from the market as inflation may remain stuck at a higher level
  due to a tight labour market.
• Conversely,
  if there is a significant miss in the report, the market should validate the
  Fed’s neutral stance and, barring a hot CPI, may even price in the end of the
  hiking cycle.

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

Following a lower set of revisions, the euro area economy marginally contracted in Q1. Meanwhile, the annual reading is also revised lower to +1.0% from the +1.3% reading from the second estimate. The negative quarterly reading means that the euro area suffered a winter recession, but by the mildest of margins. Here’s the breakdown in terms of contribution to GDP for Q1:

• Household consumption -0.1%
• Government expenditure -0.3%
• Gross fixed capital formation +0.1%
• External balance +0.7%
• Changes in inventories -0.4%

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