FX Snapshot – US Dollar Basket, EUR/USD, GBP/USD, NZD/USD

The dollar is in view ahead of the US jobs report, with EUR/USD, GBP/USD and NZD/USD all selling off. Yet with key support in play, could we see a bounce?

Pound and dollar
Source: Bloomberg

US dollar boosted pre-NFP

The US Dollar Basket has been experiencing a positive week, since moving higher from an ascending trendline support. One of the key resistance levels to watch has now been broken at $98, with price now finding support for a likely next leg higher.

As such, this looks a lot like a short-term consolidation within an uptrend and thus further upside is expected (non-farm payrolls permitting) with another major resistance ahead at $98.61 which if broken would form a six-month high.

Downside support is found at $98.00, which if broken would look towards trendline support (currently $97.77). 

EUR/USD in key zone

EUR/USD has sold off heavily ever since Mario Draghi jawboned the single currency lower last week. Price has since moved back to the $1.0819 support (May and July lows) and as such there is a possibility of a bounce.

With clear resistance at $1.0897, the breakout from this zone will determine the direction of this pair.

A break above $1.0897 would look towards resistance at $1.1 and $1.1044, whereas a closed candle below $1.0819 would look towards the next support level of $1.052 and $1.0462.

BoE drags GBP/USD lower

Yesterday’s Bank of England meeting provided GBP/USD with the biggest afternoon of selling since May.

As such, price has been brought back to the crucial $1.517 support level (June and September lows) which along with $1.5107 form the two main barriers to further selling. The outlook on pure price action looks bearish, yet it is worth being aware of a potential retracement at these levels.

The key resistance level to watch would come at $1.5241.

NZD/USD bounces from trendline

NZD/USD has bounced from trendline support, as the market attempts to regain some of the losses seen through November to date. The short-term trend certainly is towards the downside, yet with price currently finding support from both ascending and descending trendlines, there is a possibility that we could see it turn north once more.

As such, a move back through the trendline would likely signal another leg lower, whereas a bounce and close through $0.6645 could signal a period of strength back towards $0.6698 and trendline resistance zone.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.