Forex technikal and fundamental analysis: Forex Crunch GBP/JPY and the Non-Farm Payrolls

Apr 2, 2010

Forex Crunch GBP/JPY and the Non-Farm Payrolls

Posted: 02 Apr 2010 03:08 AM PDT

GBP/JPY completed a strong move up and stalled at the resistance line. At this new crossroad, the American Non-Farm Payrolls could help it make a decision.

After breaking the 140 area, the Geppy moved quickly towards 143.60, which was the peak in the middle of February. Will it fall back down towards 140? or continue higher?

The next line is 147.20 seen at the end of January and then 150 – already a major resistance line of resistance, and a round number. last seen at the beginning of the year. Looking down, 140 is the first line of support, followed by 138, the previous crossroads for GBP/JPY.

A lot depends on the Non-Farm Payrolls, that will be published on thin air this time. You may ask: What does this American figure, important as it is for the the majors, impact this cross?

The answer lies in the different behavior of each currency, as well as their current position against the dollar. The British Pound behaves in a more “normal” way – good NFP will send it down, while bad figures will send it up. GBP/USD is currently at 1.5240 and has room to move in both directions – a lot of room to move to the downside and also enough to move up towards 1.5350 – the major line of resistance.

The yen has another factor – risk. The yen enjoys fear and may rise against the all the currencies even if the dollar is rising. In addition, USD/JPY, just under 94, is at a strong resistance line. A break upwards or a drop off the resistance line could be violent.

Conclusion

So, if a really bad Non-Farm Payrolls is released, the yen will gain against the dollar, and the British Pound might not necessarily rise. In this case GBP/JPY can fall back down.

A good Non-Farm Payrolls can take USD/JPY over the top and GBP/USD just gently down – sending GBP/JPY high up.

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Forex Daily Outlook – April 2nd 2010

Posted: 01 Apr 2010 02:37 PM PDT

Most of the world is on holiday today – but not the US, that publishes the most important event in forex. On this thin volume, the Non-Farm Payrolls could save the dollar from a very bad week.

The updated estimates for the Non-Farm Payrolls stand on job gain of 185,000. This will erase many months of job losses. While the ADP Non-Farm Payrolls showed yet another month of disappointing job losses, economists expect the government’s figure to be totally different.

The main reason for this difference is the 2010 census that will take place in May. The government is hiring lots of people towards this event. It will culminate in over 600,000 jobs in May, but the impact will already be felt now.

As the dollar approaches parity with the Canadian dollar, loses a lot of ground to the Euro and the Pound and retreats against everybody except the yen, this release can boost it.

This will need to be supported with an improvement in the Unemployment Rate, that currently stands on 9.7% and is expected to remain unchanged. In previous releases, we ran into confusing reports from time to time – disappointing NFP with a drop in the unemployment rate, and vice versa. Also note the Average Hourly Earnings which are predicted to rise by 0.2%.

Further reading: I find my 5 notes for Non-Farm Payrolls trading always useful.

It’s Good Friday in the Christian world. Most countries are on holiday for 4 days. This means that the thin volume can cause strong moves. The Swiss National Bank already used the thin volume to make an intervention and pick up EUR/CHF from the floor.

So, April 2nd will probably one of the most unexpected days…

Happy forex trading!

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