Daily F.X. Analysis, March 06 – Top Trade Setups In Forex – Who’s Up for the U.S. Nonfarm Payroll? 

On the forex front, the U.S. dollars weakened further against its major peers on Thursday, with the ICE Dollar Index dropping 0.8% on the day to a two-month low of 96.60. The German Federal Statistical Office will report January factory orders (+1.3% on month expected). France’s INSEE will post the January trade balance (4.8 billion euros deficit expected).

Economic Events to Watch Today  

 

 

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EUR/USD – Daily Analysis

The EUR/USD jumped 0.8% to 1.1227. Later today, German factory orders for January will be released (+1.3% on month expected). The European Commission warned that France and Italy could fall into a technical recession, two-quarters of economic contraction, amid coronavirus impacts. On the other hand, official data showed that the eurozone’s retail sales grew 0.6% on month in January, and German retail sales were up 0.9%, both as expected.

If the risk-on sentiment continues to boost, the selling interest around the EUR could increase. If the OPEC meeting strengthens an oil price bounce, the risk sentiment will likely increase, pushing the EUR currency and other safe-haven currencies lower. The pair is currently sidelined just below 1.1140.

Besides this, the currency pair will likely take cues from the German Federal Statistical Office will report January factory orders (+1.3% on month expected). France’s INSEE will post the January trade balance (4.8 billion euros deficit expected). The doors remain open for EUR/USD to extend gains toward the next significant resistance near 1.1282 (July 19, 2019 high). 

Daily Support and Resistance

• S1 1.0949
• S2 1.1075
• S3 1.1156

Pivot Point 1.12

• R1 1.1281
• R2 1.1326
• R3 1.1451

EUR/USD– Trading Tips

On Friday, the EUR/USD is trading with a bullish bias around 1.1245. The EUR/USD may drop to complete the bearish retracement. On the lower side, the 38.2% Fibonacci retracement is likely to support the EUR/USD at 1.1180, and violation of this level can drive more selling until 1.1155 which marks the 61.8% Fibonacci level. On the higher side, the bullish breakout 1.1245 can lead EUR/USD prices further higher towards 1.1300 and 1.1335. The RSI and MACD are in the buying zone as the MACD’s histograms are over zero, the bullish zone. Consider taking buy trades above 1.1230.

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GBP/USD– Daily Analysis

The GBP/USD climbed 0.6% at 1.2951 to hit its highest mark in a week to the greenback. This came after the forecasts waned for an urgent Bank of England rate cut to follow this week’s emergency movement from the U.S. Federal Reserve to accommodate coronavirus damage. 

The GBP/USD currency pair may come under pressure in Europe if the pair do not cross the key hurdle. On the data front, the focus will be on the U.K. Halifax House Prices and the U.S. Nonfarm Payrolls report. 

At the Brexit front, the EU-UK Brexit negotiators complete their first round of trade talks. However, no conclusion has been received so far, while fisheries and the E.U. jurisdiction continue to remain as the key hurdles.

At the coronavirus front, the deadly virus continues to spread outside China, with California recently declaring a state of emergency. However, the global policymakers struggle to control the same, and it seems to have helped the risk-tone sentiment. As in result, the U.S. 10-year Treasury yields remain positive above 1%, whereas stocks in Asia are also positive by the press time.

Daily Support and Resistance

• S1 1.2631
• S2 1.2734
• S3 1.28

Pivot Point 1.2837

• R1 1.2903
• R2 1.294
• R3 1.3043

GBP/USD– Trading Tip

On Friday, the GBP/USD is trading with bullish bias after having violated the horizontal resistance level of 1.2885, and it’s heading towards the next target level of 1.3000, which is also a psychological resistance level for GBP/USD. 

The GBP/USD’s immediate support is likely to be found around 1.2917, and below this level, the GBP/USD may aim for the 1.2860 area. The MACD and RSI are in the buying zone, supporting the bullish bias for the GBP/USD. Let’s look for long positions above 1.2937 today.  

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USD/JPY – Daily Analysis

The USD/JPY currency pair flashing red and trading below the 106.00 level mainly due to the on-going risk-off market sentiment in the wake of Coronavirus intensifying fears. As well as, the currency pair hit the 6-months lows level. For now, the currency pair is currently trading at 105.94 and consolidates in the range between the 105.75 – 106.34.

Moreover, the U.S. yields have recovered slightly from the lows seen after the U.S. Fed’s rate cut. The 2-year yield is currently trading at 0.68%, representing a seven basis point gain on the overnight low of 0.61%, and the 10-year yield has recovered to 0.98% from $0.91%. 

The currency pair continued to its recent heavy losses and still trading under some heavy selling pressure for the 2nd-consecutive session on Friday.  

The reason behind all negative factors could be the market’s fear of coronavirus-led economic pessimism. Whereas, the latest numbers from the U.S., China, and South Korea suggested that the deadly virus continues to spread despite the governments’ struggles.

As in result, the safe-haven demand for the yen has weakened in Asia. As we already mentioned that the USD/JPY pair is currently trading at 107.27, representing a 0.17% gain on the day, having hit a high of 107.52 a few minutes before press time. 

Daily Support and Resistance

• R3: 109.46
• R2: 107.99
• R1: 107.08

Pivot Point 106.52

• S1: 105.61
• S2: 105.06
• S3: 103.59

USD/JPY – Trading Tips

The USD/JPY is trading at 105.900, breaking below the sideways trading range of 108.500 to 107.100 in the wake of safe-haven appeal. The pair is now in the oversold zone, but the market isn’t moving much as investors seem to wait for the NFP figures, which are coming out during the U.S. session.  

The USD/JPY has formed a Doji pattern near 105.613, and the violation of this could trigger further selling off until 104.300. We need to pay attention to the USD/JPY as the closing of candlesticks above 105.613 level can provide us with buying trade with a take profit of around 107. 

All the best for today!