EURUSD At 6-Month High

5 May, 2017

EURUSD rallied to a fresh 6-month high yesterday closing the day at 1.0983. The gains came about as later in the day, ECB officials were seen making hawkish comments on monetary policy. Governing council member, Peter Praet was quoted as saying the central bank might not wait until the asset purchase program expires in December before raising interest rates. His hawkish views came after a recent string of economic reports from the Eurozone suggested a broad pickup in both inflation as well as economic growth. On the economic front, data from the U.S. was lackluster with the quarterly nonfarm productivity numbers showing a decline in the first quarter of the year. Unit labor costs grew just 3.0% in the first quarter, while productivity declined 0.6% at an annual rate. Looking ahead, the markets will be focusing on today's upcoming nonfarm payrolls report from the U.S. Expectations are for the unemployment rate to rise to 4.6% from 4.5% previously while the monthly jobs are expected to show 198k print. Fed members, Yellen and Fischer, are also due to speak later in the day.

EURUSD intraday analysis

EURUSD (1.0985): EURUSD is now within reach of 1.1000 resistance level in the near term. The upside momentum is likely to keep the currency pair well supported to the upside, but further gains can be expected only on a strong break out above 1.1000. With the key U.S. economic releases due today, there is a chance of pull back in prices. Expect to see some short-term consolidation in the markets with EURUSD likely to close the week within 1.1000 and 1.0900. A breakout from either of these levels will signal further continuation, but it is unlikely to expect that today.

GBPUSD intraday analysis

GBPUSD (1.2915): The British pound managed to pull back higher erasing previous day's losses. Price closed back at 1.2922 with price action staying firmly stuck near the 1.2900 levels. On the 4-hour chart, the main support is seen at 1.2900 which has seen a lot of consolidation take place. The gains in GBPUSD came about on a better than expected services PMI figure yesterday. However, the failure to post any significant gains indicates that GBPUSD could be at risk of a downside correction towards 1.2600 as the final target.

USDJPY intraday analysis

USDJPY (112.20): USDJPY rallied to a fresh 2-month high yesterday at 112.50. Price action is looking weaker and could see a possible correction in the near term with 111.50 being the likely target, supported by the 50-period EMA. On the 4-hour chart, USDJPY gapped lower on the day and is poised to test the initial support at 112.00, but there is a risk of a pullback towards the unfilled gap at 112.74. USDJPY could be seen trading within a range as the yen could become favorable heading into the weekend French elections.

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