Yesterday, the market traded in our favor and helped us secure a good number of pips in the Nikkei, Gold, and WTI crude oil. Most of the investors stayed out of the market in observance of Labor day, which resulted in thin volatility. The greenback traded sideways, despite the unfavorable data from the United States.

As we mentioned in our earlier update, Wrapping Up The Trading Day – 1st May, most economic indicators weren't in favor, but still, the U.S dollar remained supported by the weaker demand for haven assets. In my opinion, investors are "pricing in" the optimistic expectations for the Non-farm payroll as well as the average hourly earnings. This means that the investors are buying the rumors for now and are likely to sell the fact later on Friday. Anyways, we will see when the time comes. First, let's have a look at the important news for the day.

Economic Events To Watch Today

AUD    

• Cash Rate (5:30)
• RBA Rate Statement  (5:30)

EUR

• Spanish Manufacturing PMI (8:15)

GBP

• Manufacturing PMI (9:30)

NZD

• GDT Price Index (Tentative)
• Employment Change q/q  (23:45)
• Unemployment Rate (23:45)

EUR/USD – The Pair with an Ascending Triangle Pattern

The European markets remained closed yesterday in observance of Labor Day. This caused the EUR/USD to consolidate in a tight trading range, in the wake of thin trading volume. Overall, the trading range remained $1.0880 – $1.0922.

At this point, the single currency Euro is supported as investors are feeling confident about Macron's victory in the final round of the French Elections, which will be held on May 7th. Moreover, the optimistic releases from the Eurozone are increasing investors' confidence in the Euro. Inflation rose to 1.9% from 1.5% the previous month, beating the forecasted 1.8%. Today, in the absence of fundamentals from the United States, we need to monitor the Spanish Manufacturing PMI.

EURUSD – 4 Hour Chart

Technical Outlook – Intraday

On the daily chart, the pair has formed indecision candlesticks which exemplify the great deal of uncertainty amongst buyers and sellers. Possibly, this is because investors want to be sure about the upcoming trend in the EUR/USD.

Looking at the hourly chart, the pair has defined a narrow trading range of $1.0850 -$1.0950. The breakage above or below will give us an additional clue to investors' sentiment. Lastly, the pair is in the ascending triangle pattern in the 4-hour chart, signaling that the breakout is likely to occur soon.

Forex Trading Signal

At this point, when the market is totally uncertain, we can't predict any long-term impact trends in the EUR/USD. However, adding a buy position only above $1.0900 would make sense, with a stop loss below $1.0880 and take profit at $1.0930.

USD/JPY – The Pair with Modest Gains

Yesterday, the USD/JPY soared to trade higher at $111.650 despite the weak economic events from the United States. The dollar traded sideways, but only against other currency pairs. The bullishness in this pair seems to have been led by the diminishing demand for haven assets.

Why has the Japanese Yen been Losing Popularity?

The Bank of Japan (BOJ) weakens the Japanese Yen by keeping the monetary policy unchanged and sharing a dovish stance. As per the remarks, the drop in energy prices is likely to hit Japanese inflation again. Weaker inflation causes the central banks to lean towards keeping the rates lower for a longer period of time.

USDJPY – 4 Hour Chart

Technical Outlook – Intraday

In the 4 – hour chart, the USD/JPY has maintained a bullish channel starting from the low on April 21st ($108.870). But this bullish channel seems to be in trouble now as we have a double top resistance waiting at $112.200. 

The 50 periods moving average is extending a strong support to the bullish trend. We can see the pair has tested the EMA support couple of times and every time the prices have pushed higher. This seems to be the case for now as we have an immediate support at $111.420.  

Lastly, the momentum indicator RSI is signaling a strong bullish bias on the part of investors. The breakage of $112.200 is likely to lead the market towards $112.650.

Forex Trading Signal

I recommend investors keep their buying positions only above $111.750 with an initial take profit of $112.150 and a second take profit of $112.600.

Ending Remarks

Today, the market doesn't have a lot of economic events to offer us and most of the investors are still waiting for the U.S labor market figures, which are due Friday. Thus, we may not see a continuation of the bullish/bearish trend in the market. So, it's highly recommended to trade level to level to avoid reversals.