Trading plan for May 7
The US Dollar came under bearish pressure on Wednesday – preliminary April NFP from ADP came well below the forecast (159K versus 199K expected). What’s more, the March reading has been revised to the downside to 175K. Market expectations for the Friday’s NFP release are turning more and more negative, weighting on the greenback. We’ll watch the unemployment claims figure on Thursday (forecast – slight increase).
North-American currency is expected to stay under pressure until the end of the week. EUR/USD was seen testing the May 1 high of 1.1290 on Wednesday. There is a double bottom pattern with a neckline at 1.1050 being formed. We expect the correction to extend towards the 1.1530 resistance this week. Watch the German factory orders in the euro zone tomorrow.
UK parliamentary elections are taking place on Thursday, May 7. Political uncertainty is expected to increase after the election, as the government will have to form a coalition. That’s why the upside in GBP/USD will be limited. A weekly candle with a long upper shadow also is a bearish signal. Support - 1.5080, 1.5000 and 1.4950. Break lower would open the way for a new wave of selling.
AUD/USD pushed above 0.8000. Watch out the resistance in the 0.8070 area. Australia will release labor market data tonight – forecasts are downbeat.
USD/JPY came back under bearish pressure, failing to overcome 120.50. We target the triangle bottom at 118.50 in the coming days.