Following the terrorist attacks in Europe and a rise in global risk aversion, the U.S. dollar has benefited as a safe haven. The greenback advanced against the euro and British pound as investors looked past the weaker- than-expected U.S. jobs report. While the March non-farm payrolls fell short of expectations, it was the decline in the jobless rate that prevented the dollar from falling.
Moreover, the Trump-Xi meeting was cordial and constructive, easing worries about a global destabilization. The focus now shifts back to the Federal Reserve and the probability for a next rate hike in June. The core U.S. Consumer Price Index, scheduled for release on Friday, is anticipated to rise to 2.3 percent from 2.2 percent the previous month, putting increased pressure on the Fed to raise interest rates sooner rather than later. This assumption could stimulate the demand for dollars throughout this week. Fed Chair Janet Yellen who is scheduled to speak today at 20:00 UTC at the University of Michigan could reiterate the Fed’s intent to press on with tightening.
From the Eurozone, this week’s economic calendar is fairly light in terms of market moving data. The only interesting piece of data could be the German ZEW Survey, due for release on Tuesday. The euro dropped below 1.06 and traders are wondering whether there will be further losses in the near-term. With geopolitical risks continuing and the April 23 French elections looming, the euro could remain under pressure.
EUR/USD If the euro remains below 1.06 we expect a next lower support zone to be between 1.0520 – 1.0490. Above 1.0620 however, the euro could head for a test of 1.0680/1.07.
EUR/USD 4 Hour Chart
GBP/USD The cable may face further losses as U.K. Consumer Prices (Tuesday) are anticipated to show a downtick. Sterling traders will also watch the U.K. Labor Market report, due for release on Wednesday. The focus will be on wage growth which is expected to show a slower growth.
We will shift our focus to the 1.2320-1.23 support area. In case sterling drops significantly below 1.23, we expect further losses towards 1.2250 and 1.22. Current resistances are seen at 1.2450 and 1.2480.
GBP/USD 4 Hour Chart
Here are our daily signal alerts:
EUR/USD Long at 1.0625 SL 25 TP 20, 40 Short at 1.0565 SL 25 TP 40
GBP/USD Long at 1.2415 SL 25 TP 30, 50 Short at 1.2330 SL 25 TP 25, 70
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