EUR/USD Forecast May 5, 2016, Technical Analysis

The Euro tried to rally during the day on Wednesday, but struggled above the 1.15 level again. By doing so, we ended up forming a bit of a shooting star and it looks as if we may need to drift a little bit lower in order to entice buyers back into this marketplace. On the other hand, if we do not drift lower and we simply break higher and above the top of the shooting star for the session, we believe that the market will then try to go much higher and reach towards the 1.16 level yet again.

GBP/USD Forecast May 5, 2016, Technical Analysis

The GBP/USD pair initially tried to rally during the day but then dipped below the 1.45 handle. Ultimately, we ended up forming something akin to a shooting star so it looks as if the market is trying to break down but I see quite a bit of support all the way down to the 1.44 handle. Because of this, I’m sitting on the sideline of this market as it is difficult to imagine this market been over to move rather easily in this general vicinity. I’m simply going to wait to see which way the market breaks, and that I will follow.

NZD/USD Forecast May 5, 2016, Technical Analysis

The NZD/USD pair initially tried to rally during the day on Wednesday but turned back around to form a massive shooting star. The shooting star sits just above significant support at the 0.68 level, which is what we need to see in order to start selling. On the other hand, if we break above the top of the shooting star that would be a very positive sign and should send this market looking for the 0.70 level again. No matter what happens, volatility will more than likely be a mainstay of this particular currency pair as it is highly sensitive to commodity markets.

USD/CAD Forecast May 5, 2016, Technical Analysis

The USD/CAD pair broke higher during the course of the day on Wednesday, as it looks like we are ready to try to reach towards the 1.30 level. This is an area that should be massively resistive though, but the interesting thing about this area is that if we break above it, the longer-term uptrend should continue. At this point, it looks like there is plenty of buying pressure so we could see buyers reenter this market on short-term dips. Pay attention oil that of course will have quite a bit of influence as well.

USD/JPY Forecast May 5, 2016, Technical Analysis

The USD/JPY pair initially fell during the day on Wednesday but found enough support near the 106 level to turn things back around and form a hammer. The hammer of course is a bullish sign, and it looks as if the market is trying to build enough of a base to turn things back around. However, there is a lot of noise between here and the 110 level, so do not think that a move higher is going to be easy. With that being said though, it does look like a bounce is very likely at this point in time.

EUR/JPY Forecast May 5, 2016, Technical Analysis

The EUR/JPY pair initially fell during the day on Wednesday, but turn right back around to form a hammer. By doing so, it looks as if the buyers are starting to return to this market, and will more than likely try to push the pair towards the 125 level above. Pullbacks should continue to see buying pressure, as it appears we are more than willing to see quite a bit of volatility in this market. The 125 level above is massively resistive though, so probably take something special to break through it.

EUR/GBP Forecast May 5, 2016, Technical Analysis

The EUR/GBP pair rallied on Wednesday, as we continue to grind towards the 0.80 level. However, there is a bit of noise just above so a pullback certainly is possible. Given enough time though, the market will find buyers as we continue to see quite a bit of support just below. The market looks as if it not only is ready to go to the 0.80 level, but possibly even the 0.81 level. This point in time, we don’t have any interest in selling this market, it appears that there is more than enough interest in going long.

AUD/USD Forecast May 5, 2016, Technical Analysis

The AUD/USD pair initially tried to rally during the day on Wednesday but found the area above the 0.75 level to be a little bit too rich. By doing so, we ended up turning a bit negative but we are still well within the massive amount of support that extends all the way down to the 0.74 level. Ultimately, we are waiting to see whether or not we get some type of supportive daily candle in order to start going long again, or if we get a daily close below the 0.74 level that we can start selling.

Forex trading plan for May 5

US dollar recovered on more hawkish comments from the Federal Reserve’s members. San Francisco Fed President John Williams claimed he could vote for an interest rate hike in June if the economy keeps improving. In addition, according to Atlanta Fed President Dennis Lockhart, two rate hikes this year were certainly possible. However, ADP employment report showed that the number of employed people in the United States rose by only 156K in April vs. 205K expected.

Risk assets also suffered as crude oil was under pressure. the American Petroleum Institute reported on Tuesday that US inventories increased last week by 1.3 million barrels.

EUR/USD is holding above support at 1.1460 after it formed spike up to 1.1614 on Tuesday, but failed to stay at these maximums. Euro area’s retail sales contracted by 0.5% in March, while an increase by 0.1% was expected. On Thursday German and French banks will be on holiday. Next support is at 1.1415 and 1.1350. The pair has to rise above 1.1550 in order for the bulls to feel powerful again. Note that there’s declining 100-week MA at 1.1638, and it should create significant resistance.

GBP/USD returned down to 1.4500. British manufacturing unexpectedly fell in April for the first time in 3 years. The nation’s construction PMI also came lower than expected (52.0 vs. 54.1). In addition, ICM poll, which was weighted to take into account the likelihood of respondents taking part in the vote, showed that 45% of voters were in favor of Brexit, while 44% were against it. The pound may suffer more if services PMI due at 08:30 GMT on Thursday disappoints. Below 1.4500 we’ll focus on the next big figure at 1.4400/1.4388 (100-day MA) and 1.4330. Resistance is at 1.4550 and 1.4630.

USD/JPY tried to recover after falling as low as to 105.55 on Tuesday. The lack of monetary stimulus from the Bank of Japan last week is the biggest bearish factor the pair. Japanese Finance Minister Taro Aso said on Tuesday that the government is monitoring speculative foreign-exchange trades and will act if it’s necessary. On Thursday liquidity will be lower because of a bank holiday in Japan, so we may see some volatile moves.  The pair will likely remain under bearish pressure. Support is at 105.00 (200-day MA) ahead of 103.70 (may 2013 high). Resistance is at 107.50 and 108.25 ahead of 110.50.

AUD/USD was little changed in the 0.7480 area where it fell from levels above 0.7700 on Tuesday. The Reserve Bank of Australia cut interest rate from 2.00% to 1.75%. There wasn’t much of the forward guidance in the central bank’s accompanying statement – we may get more insight about that from the RBA’s quarterly monetary policy statement, which is due on Friday. The RBA’s decision to act is probably connected with the slowdown in Australian inflation. Resistance lies at 0.7560 and 0.7600. Decline below 0.7450 will open the way down to 0.7410. Australia is due to release retail sales and trade balance figures at 01:30 GMT on Thursday, an improvement in data is expected.

AUD/USD Fundamental Forecast – May 5, 2016

The AUD/USD continued to weaken early Wednesday after Tuesday’s steep sell-off, but technically oversold conditions helped trigger an intraday reversal to the upside. The last reading for the Aussie was 0.7504, up 0.0022 or +0.29%.
The catalyst behind the selling pressure was an interest rate cut by the Reserve Bank of Australia. The move took place in reaction to last week’s softer-than-expected inflation data for the March quarter. The 0.25 basis point cut brought the benchmark rate to 1.75 percent.
On Wednesday, investors will get the opportunity to react to the latest U.S. economic data including the ADP employment report for April. This report could give traders an indication of what to expect in Friday’s U.S. Non-Farm Payrolls report. Investors expect the report to show the economy added 196,000 private sector jobs in April. The range is 205K to 196K.
There will also be data on factory orders, productivity and the ISM services index. Economists forecast the trade deficit narrowed in March due to a decline in imports and the ISM non-manufacturing index rose in April.
A better-than-expected ADP report could help boost the U.S. Dollar if it increases the chances of a June interest rate hike.

NZD/USD Fundamental Forecast – May 5, 2016

Early Wednesday, the NZD/USD broke sharply lower to 0.6876 before recovering to finish at 0.6898, down 0.0014 or -0.21%. The selling was partly due to the interest rate cut in Australia, a weaker stock market and a sharp decline in commodities. However, the biggest influence was likely the mixed reaction to the New Zealand employment report.
The report showed the number of employed individuals rising 1.2% in the first quarter, an even faster clip than the fourth quarter increase of 0.9% and the consensus estimate of 0.7%. The unemployment rate for the first quarter ticked higher to 5.7% from 5.4% (revised higher from 5.3%) the prior quarter and above the analyst estimate of 5.5%.
On Wednesday, investors will get the opportunity to react to the latest U.S. economic data including the ADP employment report for April. This report could give traders an indication of what to expect in Friday’s U.S. Non-Farm Payrolls report. Investors expect the report to show the economy added 196,000 private sector jobs in April. The range is 205K to 196K.
There will also be data on factory orders, productivity and the ISM services index. Economists forecast the trade deficit narrowed in March due to a decline in imports and the ISM non-manufacturing index rose in April.
A better-than-expected ADP report could help boost the U.S. Dollar if it increases the chances of a June interest rate hike.

USD/JPY Fundamental Forecast – May 5, 2016

Short-covering and profit-taking continued to drive the USD/JPY higher. A potentially bullish technical chart pattern also helped encourage further position-squaring. The strong follow-through rally drove the Forex pair as high as 107.426 before settling at 107.119, up 0.522 or +0.49%.
The U.S. Dollar reversed to the upside against the Japanese Yen after the Forex pair reached its lowest level since October 2014, when the Bank of Japan launched its second massive round of quantitative easing. Some traders blame the lack of liquidity due to a bank holiday in Japan for the profit-taking and short-covering rally.
On Wednesday, investors will get the opportunity to react to the latest U.S. economic data including the ADP employment report for April. This report could give traders an indication of what to expect in Friday’s U.S. Non-Farm Payrolls report. Investors expect the report to show the economy added 196,000 private sector jobs in April. The range is 205K to 196K.
There will also be data on factory orders, productivity and the ISM services index. Economists forecast the trade deficit narrowed in March due to a decline in imports and the ISM non-manufacturing index rose in April.
A better-than-expected ADP report could increase the chances of a June rate hike which should help support the U.S. Dollar today. The Japanese Yen could strengthen if the number misses to the downside.

EUR/JPY Fundamental Forecast – May 5, 2016

The EUR/JPY traded higher after two days of consolidation. Technically oversold conditions were primarily responsible for the rally after last week’s steep sell-off. Position-squaring driven by speculative buying fueled by thoughts of a Bank of Japan intervention also helped underpin the market. The last reading showed the EUR/JPY at 123.094, up 0.541 or +0.44%.
There is a holiday in Japan on Wednesday and Thursday so trading conditions are thin. With volume below average and several of the major players on the sidelines, we could be looking at a volatile two-sided trade over the next two day. We already saw a vicious counter-trend move to the upside earlier in the session so it is possible that one could develop in the direction of the main trend.
Outside of an intervention by the Bank of Japan, the fundamentals are likely to remain strong which means we could develop a strong downside bias for the day if the current rally fails and sellers regain control.

GBP/USD Fundamental Forecast – May 5, 2016

A stronger U.S. Dollar and renewed concerns about the possibility of a U.K. exit from the European Union continued to weigh on the British Pound early Wednesday. The last reading of the GBP/USD was 1.4479, down 0.0055 or -0.38%.
After enjoying a brief rally to its highest price since early January, the GBP/USD appears to be ripe for a near-term correction. Some traders are crediting a recent visit to the U.K. by President Obama for those campaigning for Britain to remain in Europe as the main reason for the recent surge in prices. However, his influence seems to be wearing off.
A weekly online poll published Tuesday by opinion firm ICM, shows 45 percent of voters were in favor of Brexit, against 44 percent who believe Britain should remain in the 28-member bloc.
Bolstering the ICM findings, a new Bloomberg Research poll which has 43 percent looking to stay in Europe while 45 percent want out.
However, a TNS online poll on Wednesday reverses the result, putting the “remain” camp on 38 percent and the “leave” on 34 percent.
The uncertainty created by the polls is likely to continue to exert pressure on the British Pound until the referendum on June 23. Yesterday, the Sterling posted its single one-day fall against the U.S. dollar in six weeks after investors digested the new poll data.
Earlier today, some losses were pared when the U.S. ADP report showed fewer jobs added to the economy in April. However, the dollar renewed its strength when data showed the U.S. trade deficit narrowed.
The GBP/USD is likely to remain under pressure today and over the near-term unless there is a dramatic shift in the polls. At this time, it is too close to call, but the price action suggests investors are leaning towards an exit from the European Union.

EUR/GBP Fundamental Forecast – May 5 2016

The EUR/GBP continued to strengthen for a sixth day, closing at 0.7929, up 0.0020 or +0.26%. Although there were economic reports on Wednesday, investors remained largely focused on the possibility of a U.K. exit from the European Union.
Today’s economic data from Europe and the U.K. was largely in line with expectations so there were no real surprises. U.K. construction PMI did come in below expectations as well as Euro Zone Retail Sales, but they appear to have offset each other, shifting the main focus back to the Brexit polls.
After weakening almost the entire month of April, the EUR/GBP is now in the midst of a six-day rally that appears to be gaining enough upside momentum to eventually challenge the April top at 0.8116. The primary catalyst behind the Sterling’s strength has been a perceived shift in a number of polls that suggest Brits are in favor of leaving the EU.
A weekly online poll published Tuesday by opinion firm ICM, shows 45 percent of voters were in favor of Brexit, against 44 percent who believe Britain should remain in the 28-member bloc.
Bolstering the ICM findings, a new Bloomberg Research poll which has 43 percent looking to stay in Europe while 45 percent want out.
However, a TNS online poll on Wednesday reverses the result, putting the “remain” camp on 38 percent and the “leave” on 34 percent.
The uncertainty created by the polls is likely to continue to exert pressure on the British Pound until the referendum on June 23. Because of this, it appears the way of least resistance over the near-term is up.