Price Targets for EURUSD, GBPUSD and USDJPY – May 2017
In this article, we will give some possible outcomes for EURUSD, GBPUSD and USDJPY based on technicals and fundamentals.
The EURUSD pair traded very close to the 1.10 level during the Asian session, but fell with London open as traders awaited the US jobs report. The pair still hovers above the last week’s high on Tuesday, which is an important resistance-turned-support line at 1.0950. The hawkish tone of the Fed’s FOMC statement, stating that the recent slowdown of growth is just “temporary” and that the job market will likely “strengthen” in the coming period, also gave backwind to a stronger dollar. The jobs data from the United States showed that the world’s largest economy added 211K new jobs vs. 197K expected, which is a significant gain compared with the previous month’s figure of 79K.
The unemployment rate fell to 4.5% from last month’s 4.6%, while the expected rate was 4.5%. Average hourly earnings met the expectations of a 0.3% rise, compared to previous 0.1%. The explicit tone of the Fed’s statement has already given a hint that the reported NFP figures could be better than expected. With the following French election, the euro will remain in the market’s focus. The EURUSD pair is currently trading in a channel with a positive trendline. Pullbacks now will offer buying opportunities off short-term charts, and the 1.10 level above continues to be a target. A break above sees the next resistance level at $1.1150. With a definite win of Macron on Sunday, the euro will eventually stabilize above the $1.10 level.
The British pound is trading above an important support line, after breaking the resistance at $1.2850. As long as the pound remains above this level, it is a bullish sign. The British pound initially fell during Friday but found enough support underneath the 1.2850 level to turn around and form a bullish candle. The pair is still in a sideways type of market, with the round number of 1.30 acting as a strong resistance. The UK recently announced snap elections in June, which gave strength to the sterling. A longer-term target, supported by a research-note issued by the Swiss UBS, is the 1.35 area. This is also the purchasing power parity exchange rate of the pound. As momentum picks up, a break above 1.30 could see the pound rising further to the 1.3450 resistance level. If we break down below the 1.2750 level, the next target is the 1.2550 level.
The USDJPY pair trades in a downtrend channel since beginning 2017. The pair tried recently to break the 113.00 level, but found heavy round number resistance confluenced with the upperline of the channel. The NFP number released today did help the dollar to gain initially, hitting the 112.75 level, but after that followed a small correction. Bank of Japan’s Kuroda announced that prices and wages in Japan are like to rise in the medium-term. “[A projected growth rate of] 1.5 percent is not great, but in Japan it is well above medium-term potential growth rate, meaning that the output gap continues to shrink and becoming positive and the labor market continues to tighten so that wages and prices would eventually rise to achieve the 2 percent inflation target around fiscal 2018,” Kuroda said. On a weekly chart, the pair retraced off the 61.8 Fibonacci level. A break above 113.00 could the pair see heading toward the 115.50 resistance, while a bounce off the upper trendline could send the pair toward the April low of 108.00. Technically, the pair is still in a long-lasting downtrend.
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