The USA labor market shows recovery | 06 May 2014

Euro

EU published statistics showed that the unemployment rate in the region remained at 11.8 % in March, while February's value was revised from 11.9 %. Analysts predicted +11.9%. Earlier report showed that Germany’s consumer confidence index Gfk was 8.5 pp in May, as expected.

We expect a sluggish trade in euro/dollar rate after holidays in Japan and the UK. Even the report on business activity index from the ISM publication will not be able to stir up the remaining participants in the FX market.

From a technical point of view, EUR/USD goes back to 1.3880 after the crash provoked by the stronger -than-expected data on the U.S. labor market publication.

The support levels are 1.3840- 1.3860, and the resistance levels are 1.3910 - 1.3930.

MACD is horizontal, indicating the current corrective movement rates.

Trading Recommendations

The pair is bought on falls and it saves quite a high 1.3905-1.3966 test risk. The 1.3905 break will open the way to the maximums at 1.3966. Their break will lead to 1.4000 testing.

Pound

The Banks in the UK were closed yesterday on the occasion of May Day, which is traditionally celebrated on the 1st Monday of the month. The UK accounts showed a quiet trade within a narrow range.

The pound/dollar continued to rise, breaking the resistance at 1.6822-1.6842. The pound managed to consolidate above the last level and test 1.6920, after which it was under pressure and was forced to retreat to support near 1.6822. Nevertheless, demand for it was preserved, allowing GBP/USD back to 1.6885. The support levels are 1.6840 - 1.6860, and the resistance levels are 1.6910 - 1.69300.

MACD is pointing down, indicating the current downtrend movement rates.

Trading Recommendations

"Bulls" perseverance can lead to psychological level 1.7000 testing, but we doubt their ability to move significantly above current levels.

Yen

Banking institutions in Japan were closed on Monday because of the national holiday - the Children Protection Day. In the light of this, we can expect a sluggish trade due to lack of liquidity. The ISM service sector report was published with the U.S. market participants’ arrival. The U.S. economy is gaining momentum after the winter slump in the second quarter and it can be expected that growth rate will support moderate demand for the pair dollar/yen.

The dollar/yen traded mainly in a narrow range limited by the resistance at 102.78 and the support at 102.03. USD/JPY jumped to 103rd figure on the U.S. labor wound strong data, but could not continue to grow and, once being under the pressure has returned to the support levels.

The support levels: 101.50- 101.70, and the resistance levels: 102.30- 102.50.

MACD is at zero area.

Trading Recommendations

The support testing and breaking risks are increased to 101.59-101.22. "Bulls" need to break and consolidate above 103rd figure now to loosen "bearish" pressure.