Currency Analyst since 2010

Forex trading plan for November 6

Elizabeth Belugina

The Federal Reserve’s Chair Janet Yellen said on Wednesday that the central bank’s December meeting would be a ‘live’ possibility for a rate hike if good data were released by that time supporting the Fed’s positive economic outlook. According to the futures market, the probability of a rate increase next month rose to 58%. Traders now focus on the release of the US non-farm payrolls at 13:50 GMT on Friday. According to the consensus forecast, American economy added about 180K jobs in October after gaining only 142K in September, while the unemployment rate slid from 5.1% to 5.0%. The market will likely to get quieter ahead of the release.  

EUR/USD breached 1.0900, which is now acting as resistance. The euro area released weak data: German factory orders kept falling, while the region’s retail sales also contracted. Still, EUR/USD got some support from higher EUR/GBP. The downside targets are 1.0820 and 1.0800.

GBP/USD fell on the dovish comments from the Bank of England. Only one member of the Monetary Policy Committee (MPC) proposed to raise the benchmark interest rate, the regulator lowered growth and inflation forecasts and underlined the weakness of global economy. Support line from October lows is located in the 1.5280 area and a fix below it will open the way down to 1.5200 and 1.5165. Further, support us at 1.5100. Resistance at 1.5340 (200-day MA), 1.5380 and 1.5380 has solidified. The picture looks negative.

USD/JPY moved above last week’s consolidation range. US dollar is driven up by US Treasury yields, which rose to the highest levels since 2011. The pair is currently trying to overcome 100-day MA and 61.8% Fibo of the August decline in the 121.80/122.00 area. The next Fibonacci level lies right above 123.00 – this is the level to focus on in case of good figures from the US on Friday. Support is at 121.50, 121.15 and 121.00. The best trading strategy is to buy on the retreat to these levels or look for other opportunities to enter longs.

Oil prices remain under pressure after the decline on Wednesday. Australian dollar is hampered by the strength of its US counterpart. Positive comments from the RBA’s Governor Stevens were not much of help to Aussie. The Reserve Bank of Australia will release its quarterly monetary policy statement early on Friday. 55-day MA at 0.7137 is providing some support for AUD/USD, but it remains vulnerable for a decline to 0.7015 (September support line). Resistance is at 0.7200 and 0.7280. 

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