EURUSD pair has been ranging within 200 pips zone for the last three days. The situation in Greece and statements coming from the ECB president Mario Draghi, which warns Greece that Troika no longer accepts bonds as collateral for central bank loans, enabled 1.15 level as a strong resistance zone and pushing EURUSD each time down towards 1.1300 support level. Meanwhile, PMI figures for Spain, Italy, Germany, Great Britain and the whole Euro zone were published better than expected, hence Euro supported from the bottom too. At the time the pair is traded in the 1.1450 area.
Yesterday, the European Commission economic forecasts revealed for the first time since 2007 that economies of all European Union member states are expected to grow again this year.
Thus, growth this year is expected to rise to 1.7% for the EU as a whole and to 1.3% in the euro area. EURUSD is now part of a very bullish picture which can only be disturbed by the report of the NFP today. It’s unsafe to say that the Non-Farm Employment Change is likely to beat expectations, but any number bigger that 200k will have a positive impact on the American dollar. For the coming week we may consider 1.3000 support level (for corrections) as an area of development for this currency pair and 1.1540 as a resistance level or even higher (for impulses).
Also the GBPUSD price action took a serious turn as the quotation rose up to the 1.5335 resistance level. This area is important as it is near the 50% Fibonacci retracement (applied for the 1.5824 high) and it also coincides with the negative gap from the 4th of January. If the currency pair remains above the 1.5300 support level for the rest of the day, then the 1.5370 and even 1.5400 may become easy targets. Even if yesterday‘s quick appreciation of the pound was mostly a technical movement, there is also a fundamental explanation which refers to the thought that the UK is the next best thing after the US.
EURCHF has encountered an important resistance level at 1.0600 but a breakout of the 1.0639 high may boost the currency pair to new highs. Denmark’s central bank cut its key policy rate to -0.75% yesterday as it continues to defend the crown currency’s peg to the euro.
The price of oil went through an episode of depreciation with the publication of the US oil inventories rising to 6.3 million barrels. The market recovered and kept is bullish premises as better than expected jobless claims data was published in the US, a higher economic growth forecast was released for the European Union and the People’s Bank of China cut banks reserve requirement ratios to 19.5% on Wednesday, setting free an estimated 600 billion yuan which is due to encourage more and cheaper loans.
For now, all eyes will be on today’s NFP figures, whether in-line with expectations or disappointing, volatility seems to be inevitable.
