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Trading on the Euro/dollar pair closed up on Thursday by exactly 100 pips. After leaving its 7-day range, the Euro appreciated against the dollar as far as 1.0983. The sense of euphoria at breaking the 1.0940 level blinded buyers to the growth in US 10Y bond yields and the drop in gold quotes.

Buyers enjoyed some support from the crosses and commodity currencies. Yesterday’s drop in oil by 4.2% weighed negatively on the Aussie and Canadian dollars. Oil has dropped by 13% in the last 3 weeks. The situation is bordering on crisis.

US statistics:

• The number of jobless claims in the US has fallen to 238,000 (forecast: 247,000, previous reading: 257,000);
• The US’s trade deficit has narrowed slightly to 43.7 billion USD (forecast: -44.5 billion, previous reading: -43.8 billion);
• Factory orders in the US in March went up by 0.2% (forecast: 0.4%, previous reading: 1.2%).

Market expectations:

Today’s (Friday) key event is the release of the US labour market report (NFP). I don’t make predictions on payrolls day. There’s a case to be made that assumptions of Emmanuel Macron’s victory in the French election and a weak US labour report are behind yesterday’s rally.

Day’s news (GMT+3):

• 10:00 Switzerland: foreign currency reserves (Mar);
• 15:30 Canada: net change in employment (Apr), unemployment rate (Apr);
• 15:30 USA: average hourly earnings (Apr), nonfarm payrolls (Apr), unemployment rate (Apr);
• 17:00 Canada: Ivey PMI (Apr);
• 18:30 USA: Fed’s Stanley Fischer speech;
• 20:30 USA: Fed’s Evans speech, Fed’s Yellen speech.

EURUSD rate on the hourly. Source: TradingView.

Intraday forecast: low: n/a, high: n/a, close: n/a.

Buyers obliterated 1.0940 level on Thursday and finally came out of the 7-day range. The targets from the sideways range are hovering around 1.1000 and 1.1010. From here, we could see a short-lived corrective phase.

If we start from the daily timeframe, there is a strong resistance passing through 1.1050 level. Now we must wait for the daily candlestick to close following today’s payrolls and to see how the market opens on Monday after the second round of the French election. Judging by yesterday’s surge, market participants are certain of an Emmanuel Macron victory. If the rate can break 1.1050, the 1.1300 level will come into clear view. Still, given that it’s payrolls day, I’m not making any predictions.

Positives for the Euro (+):

Fundamental:

(+) US president Donald Trump favours a weaker dollar;

(+) French elections: Emmanuel Macron won the first round of voting by a small margin;

(+) S&P has reaffirmed Germany’s credit rating at AAA/A-1+ with a stable outlook;

Technical (short-term):

(+) Small speculators have increased long positions by 4,253 to 66,753 contracts and short positions by 493 to 61,457 contracts. net-long positions have grown from 3,759 to 5,296 contracts;

(+) According to myfxbook, the Short/Long ratio as of 7:19 EET is 82%/17%, lots: 17760/3760 (previous day: 11825/6342), positions: 48580/14020 (previous day: 36689/20337);

(+) German 10Y bond yields: 0.382% (up 14.02% from 04/05/17);

(+) EURGBP (D): CCI (20), Stochastic (5,3,3) – up;

(+) EURUSD (M): Stochastic (5,3,3), AO, AC, CCI (20) – up;

(+) EURUSD (W): AO, AC, Stochastic (5,3,3), CCI (20) – up;

(+) EURUSD (D): AO, Stochastic (5,3,3), CCI (20) – up;

Negatives for the Euro (-):

Fundamental:

(-) ECB head: revision of ECB’s monetary policy not required at present;

(-) On Thursday, the 4^th of May, according to CME Group’s FedWatch, the probability of a rate hike in June has risen from 75.2% to 78.5%, in July from 77% to 80% and in September from 87% to 87.6%;

(-) Tension surrounding the situation with North Korea. Increased demand for safe haven assets;

(-) The US Congress has approved a temporary budget, avoiding a government shutdown for the time being. A week’s delay will give time for knocking out a draft budget for the rest of the fiscal year (end of September). It became clear on the 1^st of May that Republicans and Democrats had settled on a compromise to keep the budget going until the 30^th of September;

Technical (short-term):

(-) According to data from  25/04/17, Large speculators on the Chicago Exchange have reduced their long and short positions. There are currently more short positions than longs. Long positions have fallen by 32,054 to 153,394 contracts, while short positions have fallen by 25,030 to 181,340 contracts. Net-short positions have increased from 7,023 to 27,946 contracts;

(-) US 10Y bond yields: 2.322% (up 1.29% from 04/05/17);

(-) EURGBP (M): AC, AO, CCI (20), Stochastic (5,3,3) – down;

(-) EURGBP (W): Stochastic (5,3,3), AO, AC, CCI (20) – down;

(-) EURGBP (D): AO, AC – down;

(-) EURUSD (D): AC – down.