Forex Video Briefing (7/3) – NFP and USD Reaction
The US Dollar Index showed that USD popped up after the NFP release, but is now held at the falling trendline from June’s high near 81. A break above 80.35 will be needed to show bullish breakout and expose the June high again. Otherwise, if price falls back below 80, we should be looking for continuing USD weakness going into next week.
The EUR/USD fell below a rising trendline after the NFP data. However, a break below 1.36 will likely be needed to convince traders of a bearish continuation at least towards June’s low in the .3505-1.3520, and maybe the 2014-low at 1.3476 as well. An additional clue could be a pullback that fails to break above the 1.3640-1.3650 area, which is a recent support/resistance pivot area. A break above 1.3650 however would make this a false breakdown, which is a bullish signal itself.
The USD/JPY popped up above June’s falling trendline, and above the 102 level, which is the price has been oscillating around since May. If price can now hold north of 102 on a pullback, then the bullish outlook toward 102.80-103 will be in sight. This is the June high, and consolidation resistance since April. if price gets up here, it would be challenged be a falling trendline shown in the daily chart. If price falls below 101.80, USD/JPY remains in consolidation, with short-term downside risk toward the 2014-lows near 100.75-110 area.
The GBP/USD was resilient after the initial dip. Traders defended the 1.71 area, and the 4H chart still shows a very strong bullish market in play. A break at least below 1.71 and below the rising trendline in the 4H chart will be needed to suggest consolidation. Otherwise, there is room toward the 1.7335-40 area, which is the 50% retracement of the 2.1161 to 1.3514 dip during the financial crisis.
Gold (XAU/USD) fell after the NFP release, but just like the sterling pound, it bounced right back. It has invalidated a bullish breakout on the back of news, which does not necessarily reverse the uptrend we have seen in June. A break below 1306 might be needed to suggest a bearish correction. Otherwise, within consolidation, gold still has bullish bias. Note the 4H RSI still holding above 40. To the upside, 1342 will be the next key level to monitor for resistance.