EUR/USD Pulled Back From The Resistance Trend Line

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EUR/USD reached the resistance trend line of the channel, but could not break out above it at this stage and began depreciating. That is especially obvious on the D1 time frame.

On the same time frame we can see a RSI divergence between the last four highs, which, if it reaches its limit, could lead the pair to 1.1400, which is a little over than 38.2% of the pair’s rally from 1.04945 (26th February 2017).

The pair is in a resistance zone both on the monthly and weekly time frames. Not to mention that today is the last day of August and we will see how the monthly bar will close in a few hours, which will help us figure out whether there will be a deeper correction.

Tomorrow the US Change in Non-Farm Payrolls data will be announced, which usually causes major volatility on the market and sometimes becomes a catalyst for large movements. So if there will be a correction the news tomorrow could be the beginning of it.

The USD-related Currency Pairs After The NFP Data Announcement

The US NFP data turned out to be even more positive than what was expected and logically all USD-related currency pairs moved in favour of the American currency. My expectations for some pairs (like USD/JPY and XAU/USD) were fulfilled, but others (such as the ones about GBP/USD and USD/CAD) were proven wrong.

GBP/USD in particular had formed a “hanging man” bar on the monthly time frame, which, as usual, was a trustworthy signal. The pair could not break out above the high at 1.30296 and started falling.
For now the pair remains within the wide range, and I think the next target to the downside will be the zone 1.2830 – 1.2800.

To the upside the scenario for a rally to 1.33180 – 1.3200 remains possible, but for the moment its probability is decreasing.

USD/JPY – Before And After Expectations For The NFP

Today is the first Friday of the month and as usual, we are all expecting the announcement of the US NFP data, which always causes a lot of volatility on the market.

On the W1 time frame screenshot you can see the important visible, as well as one possible resistance trend line (marked by a dotted line), which I think the pair might reach either today or on Monday after the NFP data is announced. What is more, according to the economic calendar the expectation is that the NFP data will be very positive.

Despite that I think it is quite possible for the pair to form a corrective drop before the breakout of the potential resistance trend line and then a rally to the 122.00+ target.

I think that in the alternate scenario the pair will drop during the news event to 112.00, but that scenario is less likely in my opinion.

No Surprises With GBP/USD And The Other Main Currency Pairs After The NFP

The US Change in Non-Farm Payrolls data that was released today turned out to be much worse than expected and despite that, apart from causing major volatility, the USD did not weaken at all, on the contrary – right now it is rising.

As far as GBP/USD is concerned my expectation came true completely – the GBP fell with 65 pips, I suppose that after a correction the drop will continue.

EUR/USD fell with 60 pips.

USD/JPY is an interesting case – the pair is moving within a downward channel, but it hasn’t reached the trend lines for a fourth time.

Despite that the pair has been range-bound for four days now and for now that just confirms the double bottom. It would be good to watch how today’s daily bar will close – in case it forms another clear pin bar, we could logically assume that the pair will rise toward 111.00 or higher.

To the downside the target should be at the support red trend line of the channel.