USD set for decent pullback but NFP is key

Forex Daily Market Insight

Today’s focus turns to US Non-Farm Payrolls

NFP is key

If the NFP data comes out as expected or slightly weaker than I think we’ll see the USD index back down towards 91.50.

The USD is showing signs of fatigue and looks set for a major pullback. The USD Index is trading sideways through support and that means it’s susceptible to a move lower, although the US NFP data will have the final say.

NFP

That means the majors all have a chance for a ‘relief rally’ as such. Technically they are all set up for a rally against the USD.

This is what I can see happening if the NFP data is weak

I can see the EURUSD back to 1.2100 at least before it heads lower. Resistance is way back at 1.2350 so it’s got plenty of room to get loose if the NFP data is weak.

USDJPY has already started to slide and looks set to potentially test 108.50 support.

GBPUSD is still in the doldrums so I expect a bounce to be somewhat muted. Resistance is way back at 1.3710 but I doubt it will get that high. Maybe 1.3650.

The AUDUSD has potential to hit 0.7600 at least, with major resistance back at 0.7750.

The NZDUSD has room to head back to 0.7100 at least with major resistance way back at 0.7200.

If the NFP data is stronger than forecasts than the USD will rally again.

How far it goes will depend on the outcome. Just remember there are 3 major variables.

Non-Farm Payrolls – 192k forecast

Unemployment Rate – 4.0% forecast

Average Earnings MM – 0.2% forecast

For a solid move in the USD ideally we need all 3 to be strong or weak. A mixed result will not be fun or tradable.

Asian Session

It’s golden week so Asia will be volume quiet. The Aussie has a chance on the RBA Quarterly Policy Statement.

As I mentioned there is a good chance for a bounce so hawkish RBA should see the AUDUSD rally.

European Session

There’s a few bibs and bobs coming out which may provide a short-term trade, but I expect most traders to be on hold waiting for the US NFP data.

North American Session

It’s crunch time. US NFP front and center. All majors are in play so make sure you’ve done your analysis well before the event.

Plan your trades around the pairs with the best technical setups.

Don’t forget CAD Ivey PMI data also.

Technical Set Up – What’s Happening with the Majors

NFP

Today’s Fundamental Drivers

NFP

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