US employment report supports USD

The USD edged higher against its counterparts on Friday and during today’s Asian session, as it found support from the release of the US employment report for March. The Non-Farm Payrolls figure dropped as was expected, yet the unemployment rate ticked down, being a strong reminder of how tight the US employment market was in the past month. Overall, the release passed relatively unnoticed given the Catholic Easter holidays and as the rates and figures released seemed to be largely already priced in by the market, providing little surprise. We expect March’s employment data to allow the Fed to continue to tighten its monetary policy, should it intend to in order to combat inflationary pressures in the US economy. Maybe the most noteworthy movement in the FX market was the weakening of the JPY, which lost ground as the monetary outlook divergence seems to widen. It should be noted that there today the new BoJ Governor Kazuo Ueda is to take over the reins from Haruhiko Kuroda and an inauguration speech is to be delivered in today’s European session. Should the new Governor imply that the ultra-loose monetary policy settings of the Bank are to remain unchanged we may see the JPY losing further ground. US stockmarkets are to open today after the extended weekend and we may see interest building up as the week progresses and the earnings season is about to begin.

USD/JPY edged higher on Friday and during today’s Asian session, yet failed breach or even reach the 132.85 (R1) resistance line. We tend to maintain our bias for the pair’s sideways motion between the 132.85 (R1) and the 129.75 (S1) level to continue, yet we note the bullish tendencies displayed by the pair over the past 48 hours as it is on the rise and the RSI indicator remains above the reading of 50. Yet for a bullish outlook, we would require the pair to break clearly the 132.85 (R1) resistance line, a scenario that would enable the bulls to take aim at the 135.15 (R2) resistance level at a future stage. Should the bears be in charge we expect the pair to reverse direction and reach if not breach the 129.75 (S1) support level. 

AUD/USD seems to be edging higher in today’s Asian session as the bears seem to find it harder to push lower towards the 0.6630 (S1) support line. For the time being though we intend to maintain our bearish outlook for the pair as long as its price action remains below the downward trendline incepted since the 4^th of April. Please note that the RSI indicator below our 4-hour chart seems to remain between the reading of 50 and 30, also implying a rather bearish sentiment on behalf of the market. Should the selling interest be maintained, we may see the pair breaking the 0.6630 (S1) support line and aim for the 0.6565 (S2) support level. On the other hand should the pair find extensive fresh buying orders along its path, we may see the pair reversing course breaking the prementioned downward trendline, the 0.6700 (R1) resistance line, thus paving the way for the 0.6760 (R2) resistance level.

Other highlights for the day:

During the European session we note the release of Turkey’s unemployment rate and current account balance, both being for February, while a number of markets are still closed. On the monetary front we note the speech of NY Fed President Williams late in the American session, while on a more fundamental level we note that IMF-World Bank Spring Meetings begin. During tomorrow’s Asian session, we note the release of Australia’s consumer confidence for April and Business conditions and outlook for March as well as China’s inflation metrics for the same month.

As for the rest of the week:

On Wednesday, we note the release of Japan’s Machinery Orders and Corporation Goods Prices and the US inflation metrics, all for the month of March. On the monetary front we highlight BoC’s interest rate decision and the release of the Fed’s March meeting minutes. On a busy Thursday, we anticipate Australia’s Employment data, followed by China’s trade data and in the European session, Germany’s Final HICP rate, all being for March followed by UK’s GDP and Manufacturing output growth rates for February, the Czech Republic’s CPI rates for March, Eurozone’s Industrial Production for February and lastly the weekly US Initial Jobless claims figure and the PPI rates for March. Finally,  on Friday, we have New Zealand’s Manufacturing PMI, Sweden’s CPI and France’s Final HICP rate all for March, and at the finishing of the day we have Canada’s Manufacturing Sales for February and the US Industrial Production for March the preliminary University of Michigan Consumer Sentiment for April.

AUD/USD H4 Chart

Support: 0.6830 (S1), 0.6565 (S2), 0.6490 (S3)

Resistance: 0.6700 (R1), 0.6760 (R2), 0.6825 (R3)

USD/JPY H4 Chart

Support: 129.75 (S1), 127.55 (S2), 125.05 (S3)

Resistance: 132.85 (R1), 135.15 (R2), 137.90 (R3)

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