US dollar: attention, fasten your seat belts on the eve of the NFP

Many traders, wishing to enter the market at the best price, use different methods of finding an entry point, but there is a common opinion, and it comes down to the border of the current trend.

Thus, knowing the location of the border of the current trend at each moment in time, the trader sees the best price for trading, both during the continuation of this trend and at the change of trend.

I present to your attention the boundaries of the current trends in the main quotes for April 2, 2021:

EUR / USD : 1.1765 – the border of the uptrend
GBP / USD : 1.3840 – the border of the uptrend
AUD / USD : 0.7625 – the border of the uptrend
NZD / USD : 0.7030 –
USD / JPY uptrend border: 110.60 – USD / CHF uptrend border
: 0.9425 – the border of the
USD / CAD downtrend: 1.2550 – the border of the
USD / RUB downtrend : 75.00 – the border of the
EUR / RUB uptrend (long-term) trend : 88.00 – the border of the upward (long-term)
GOLD trend : 1725 , 50 – the border of the uptrend
WTI : 61.10 – the border of the uptrend

This video is devoted to the demonstration of the trading plan for the main quotes (EUR / USD, GBP / USD, AUD / USD, USD / JPY, USD / CHF, USD / CAD, EUR / RUB and USD / RUB) for the next day

Dollar: It’s Time for Facts

In March, the US dollar showed impressive results against the background of often disappointing macroeconomic statistics for the United States. Let’s see how he behaves in April, when the data starts to improve steadily. EURUSD’s reaction to the US labor market report can set the direction for the main currency pair for a month, and possibly for a longer period. The more interesting it will be to watch her.

Daiwa Securities draws attention to the fact that greenbacks are bought not only by speculators, but also by asset managers. According to the company, the USDwill continue to rally as the US economy improves and Treasury yields rise. Nordea Markets echoes it, believing that EURUSD is heading to the 1.15 level. I disagree with them.

Markets are rallying on expectations, and it just so happens that due to massive fiscal stimulus and rapid vaccinations, US GDP forecasts for 2021 have been rising, while the EU’s COVID-19 vaccine failure, lockdowns extended and the third wave of the pandemic in Europe forced JP Morgan and Deutsche Bank (DE: DBKGn) to reduce the estimates of the expansion of the eurozone economy from 5.8% to 5.3% and from 5.6% to 4.6%, respectively. Thus, EURUSD was sold in March on rumors, but the time for facts has come. And they are such that, despite the restrictions imposed, business activity in the currency bloc is growing, and the strength of the US economy will help other countries get off their knees.

Dynamics of leading economic indicators

The manufacturing sector of the eurozone in March managed to pull the composite PMI into the expansion zone. The German Manufacturing Purchasing Managers Index showed the best performance in its 25-year record-keeping history. At the same time, the increase in the WTO forecasts for the growth of international trade in 2021 to 8% is a strong argument in favor of buying currencies from export-oriented countries and regions. It’s about the euro. Indeed, the WTO notes that the $ 1.9 trillion stimulus from Joe Biden will boost import demand in North America by 11.4%. Most of this demand will be absorbed by manufacturers from Asia and Europe.

Thus, there is only one thing missing for the EURUSD bulls. Accelerated vaccination. So far, only 16.5% of the EU population has received at least one injection, compared with 45.6% in the States. I think the situation will change in the second quarter. And the point is, first of all, in psychology. There are people who do not want to be vaccinated, there are many of them. Therefore, a quick start does not guarantee a winning finish.

A strong labor market report will only convince the strong position of the US economy, which in the medium term is a boon for export-oriented countries. In this regard, an increase in employment above the 647 thousand expected by Reuters experts may provoke a further rally in the S&P 500 and support EURUSD. On the other hand, if Treasury yields resume growth, the euro will come under pressure.

The market reaction is really very interesting and can set the direction of the main currency pair for a month or more. At the same time, a confident breakout of the resistances at 1.18 and 1.184 will serve as a signal to open longs, while the inability of EURUSD to stay above these levels will be a sure sign of the bulls’ weakness.

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