FX Technicals: EUR, JPY And GBP

The ISM manufacturing PMI index grew at a slower-than-expected pace in the month of April, data from the Institute of Supply Management showed on Monday. The index slipped to 54.8 in April, from 57.2 in the previous month and marked the second month of decline after hitting a high of 57.7 in February.

The data was accompanied by the weak pace of growth in personal income and expenditure alongside weaker construction spending, which declined 0.2% on the month. The only bright spot was the ISM manufacturing prices paid, which rose to 68.5, more than forecasts but still lower from March’s 70.5 print.

The U.S. dollar was trading mixed amid a holiday thin trading yesterday as USD/JPY rally marked a fresh 2-month high.

Looking ahead, the economic calendar today includes the manufacturing PMI numbers from the Eurozone and the UK, followed by the quarterly employment report from New Zealand.

4-Hour EUR/USD

EUR/USD was trading weak yesterday as prices gapped higher on the open at 1.0906 only to close the day with some modest declines as price closed at 1.0898.

In early trading today, EUR/USD is attempting to push higher, but price action is evidently trapped within Friday’s range. A breakout from this range will potentially set the tone for near-term gains or declines. To the upside, 1.1000 is the next obvious target, while to the downside EUR/USD could be aiming for 1.0800 with the potential to see further declines push the common currency lower towards the next support at 1.0700.

4-Hour USD/JPY

USD/JPY has been powering ahead, and price action could be seen testing the resistance level at 112.00 possible. However, further gains are unlikely to come by unless we see a strong breakout above this resistance level.

The 4-hour Stochastics is currently pointing to a bearish pergence while at the same time we see a possibility of a pullback in USD/JPY toward 111.00. We also expect to see a higher low being formed near 110.00 which could be tested in the near term. To the upside, above 112.00, price action could remain choppy unless we get to see support being established here.

4-Hour GBP/USD

GBP/USD is seen retreating after posting a 6-month high on Friday at 1.2965. Price action is looking a bit weaker, but the upside is supported by the bullish flag pattern that was formed.

Still, there are some risks to the downside which could see GBP/USD slide toward 1.2600 level where support could be established. On the 4-hour chart, we see a possible evening star pattern that was formed late last week which indicates possible downside in prices. Today’s UK manufacturing PMI is due for release with expectations pointing to another weaker print. A better than expected data could, however, be supportive of the GBP/USD strength in the near term.

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