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FX.co ★ 05.08.2022: Traders expect Nonfarm payrolls. Outlook for EUR/USD and GBP/USD

05.08.2022: Traders expect Nonfarm payrolls. Outlook for EUR/USD and GBP/USD

The greenback remains stable in the anticipation of today’s employment report from the US. Investors have taken the wait-and-see approach as information about the US labor market conditions will affect further actions of the Federal Reserve.

Most are sure that the Fed will become less aggressive. However, the real supporters of the hawkish approach, such as St. Louis Fed President James Bullard, still insist on active tightening of monetary policy to combat high inflation. Notably, publication of inflation reports is the most important event of the upcoming trading week.

Now, let us focus on fresh macroeconomic reports. Thus, in Germany, the largest eurozone economy, industrial production unexpectedly increased by 0.4% in June. Economists had foreseen a decline. The positive trend was caused by the withdrawal of restrictions in China. Notably, supply disruptions spurred by the military operation in Ukraine are still in place. Curiously, investors are pricing in all the information from the eurozone very carefully.

On the trading charts, we see that the euro/dollar pair continued hovering within the channel of 1.0150/1.0270. As a result, the price rebounded from the lower limit of the range. The pair’s fluctuation within the range points to uncertainty among traders. That is why speculators are paying more and more attention to the flat. Sooner or later, this will lead to a strong outgoing impulse. Although there are signs that the sideways channel is overheated due to its long-lasting formation, a strategy based on a rebound from either limit could still be used. Against the backdrop, the volume of short positions may increase near the area of 1.0250/1.0270. This, in turn, may cause a bounce to the lower limit of the range.

Noticeable changes in the form of a signal of the outgoing impulse will occur if the price settles beyond either control level. It may settle above 1.0300 in case of an upward movement and below 1.0100 in case of a decline toward the parity level.

As for the pound/dollar pair, yesterday, it showed high activity. However, it is still hovering around the level of 1.2155. Such a movement points to mixed interest among traders, allowing speculators to benefit from the situation.

Under the current conditions, bears are trying to revive the downtrend after the recent correction. This process is likely to be gradual. Once the price settles below 1.2100 on the four-hour chart, traders will receive the first sell signal. In this case, the quote may start falling towards the psychological level of 1.2000.

The pair will resume gaining in value, if it goes above 1.2200 on the four-hour chart.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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