Traders Waiting On US Employment Report

Jul 02 21, 10:41 GMT

The USD strengthened against a number of its counterparts yesterday even though some economic data released on Thursday could have been better. According to the Dollar Index the greenback is now trading at levels previously seen in April which could imply that buying orders are building up gradually for the USD. Friday is expected to be a very interesting session for the USD and market participants will be locked in for the star event of the week, the US Employment report for June. Expectations remain high with a drop of the unemployment rate to 5.7% from previous 5.8%. Non-Farm payrolls are expected to rise to 700K from previous 559K and the Average Earning Y/Y are expected to jump to 3.7% from previous 2.0%. Caution is advised as this event can produce significant market moving effects.

EUR/USD moved lower for the past four consecutive daily sessions and has reached a two month low on Thursday. If the downward trend is to continue then the (S1) 1.1810 support could be the next stop for the bears. Lower than that we have also noted the (S2) 1.1745 line and even lower the (S3) 1.1705 which were both last seen in March. If the currency pair is to rebound upwards then the (R1) 1.1880 could be the first target for the bulls while even higher the (R2) 1.1920 line could also be attempted. At the top we have noted the (R3) 1.1960 level which is the highest level reached in the current and past week. The RSI indicator below our chart seems to have stabilized nearby 35 implying the selling momentum is still currently in play.

WTI trades at $75 per barrel after OPEC+ delays decision

WTI managed to maintain its upward momentum formed in the past days and stabilized at higher levels. During Thursday’s European afternoon the commodity briefly surpassed its previous high reaching above $75 per barrel forming a two year high. The OPEC+ meeting did not reach a final conclusion on Thursday causing speculation to surge which could be adding more upward pressure on Oil prices at the moment, as anticipation is increasing. The initial forecast for the meeting was an increase of around 500,000 barrels per day in August. However, according to a report by Reuters, the OPEC+ group may be considering an increase of 2 million barrels per day (bpd) to the oil market between August and December. Despite the group’s decision, which upon announcement could move Oil prices substantially, at the moment demand for Oil is increasing in countries like China and the US which seems to be sending bullish messages to traders. On the contrary and to keep a more balanced outlook many countries around the world especially in the Pacific region are facing outbreaks of the variant which could be a great concern for the OPEC plus group. In this case the organization and its allies may see a more strategic approach as appropriate possibly remaining in a wait and see position.In the past days, WTI’s price was also fueled by a substantial decrease of stockpile drawdowns which continue to appear on a weekly basis.

WTI continued its ascendance on Thursday testing the (R1) 75.00 for the first time since 2018. If the upward momentum continues then a lift above the (R1) could be setting the ground for the (R2) 76.60 level to come into play. Our highest resistance for this report is the (R3) 78.05 level. In the opposite direction WTI could fall back to the (S1) 73.20 support in case a selling trend manifests while the (S2) 71.70 can also be a support even lower. At the bottom the (S3) 69.75 is utilized as our lowest support for this report and was last seen in mid-June. The RSI indicator seems to be nearby the 60 level which could be signalling that the buying orders exceed the selling ones at the moment.

Other economic highlights today and the following Asian session:

During the European morning today we get the Eurozone Producer Prices figure for May while the EUR traders will also be interested in ECB president Christine Lagarde’s speech later in the European afternoon. In the early US session we get the US employment report for June with the Non-Farm Payrolls, the Unemployment rate and the Average Earnings figures as the major focus for traders. At the same time the Canadian Building Permits and Trade Balance for May are expected. Later in the US session we get the Baker Hughes Oil rig count figure for the week. On Monday’s Asian session we get the Japanese Services PMI for June and the Australian Building Approvals and Retail Sales both for May. A few minutes later the Chinese Caixin Services PMI for June will be coming out. Finally, BoJ Governor Haruhiko Kuroda will be speaking at an undisclosed time however.

EUR/USD H4 Chart