Cable spiraled through 200SMA and cracked psychological 1.35 support after dollar was briefly lower on overall disappointing US data, but quickly regained traction and extended its strong three-week rally. Weaker that expected rise in new jobs in April (164K vs 189K in March) and especially miss in average hourly earnings which rose by 0.1% in April, missing 0.2% forecast, were negative signals. But US unemployment surprised positively on dip to the lowest in18 years at 3.9%, beating 4% forecast. Despite the data may look bad at the first sight, overall figure is still satisfactory and may keep Fed on track for rate hike in June, despite the central bank was not hawkish enough as market participants expected after its policy decision earlier this week. All these keep dollar bulls steady and signal fresh extension of an uninterrupted rally since mid-April. On the other side, sterling came under increased pressure after recent disappointing data from UK which sidelined hopes for rate hike in May (expectations dropped to 18% from 58% last week) which adds to cable’s strong bearish sentiment. Bears look for fresh negative signal on close below 200SMA today, with firm break below 1.35 handle to open way for test of pivotal support at 1.3442 (Fibo 38.2% of 1.1930/1.4376 recovery) and fresh bearish extension which could travel to 1.3354 (Fibo 76.4% of 1.3038/1.4376 ascend). Strong bearish momentum maintains pressure while bears continue to ignore oversold conditions which suggest some corrective action in the near-term. The pair is also on track for the third straight strong bearish weekly close, the sequence not seen since post-Brexit vote bearish acceleration, which adds to strong bearish environment. Selling upticks is seen as favored scenario with solid barriers at 1.3711 (former low of 01 Mar) and 1.3756 (falling 10SMA) expected to cap.
Res: 1.3534; 1.3585; 1.3605; 1.3629
Sup: 1.3486; 1.3442; 1.3400; 1.3354
