GBP/USD – Could rise to 1.5294

EUR/USD – Weak NFP is the last hope of recovery, could test 1.1140

The EUR/USD managed to sustain above 1.10 levels in the previous session after the European Central Bank (ECB) left key rates unchanged, while stressing the open ended nature of its QE program. The ECB did revise its growth forecast higher post which the pair spiked to 1.1110, however bank’s readiness to extend QE post September 2016 eventually weighed over the pair. Furthermore, the bank also stated readiness to buy bonds with negative yields up to the deposit rate (-0.2%). It also lowered its 2015 inflation forecast, although forecast for 2016 and 2017 was revised higher.

The pair currently trades at 1.1020 levels, with daily RSI oversold at 27.48. No fresh signs of technical recovery are currently seen on hourly or 4-hour charts as well. A break below 1.0991 (Aug. 2003 closing) could lead to a sharp sell-off as the next major support is seen directly at 1.0792. On the other hand, the pair could rise to 1.1140 in case the US monthly non-farm payrolls report disappoints market expectations. Moreover, a weak US data could see investors price-in the upward revision of the growth forecasts by the ECB. At the moment, the uncertainty ahead of the NFP report caps gains in the EUR/USD pair. The Q4 Eurozone GDP number could trigger minor moves, although focus shall remain broadly on the US NFP numbers.

GBP/USD – Could rise to 1.5294

The GBP/USD pair largely tracked the movements in the shared currency on Thursday, due to which it ended weak at 1.5245. The pair had slumped to a low of 1.5213 before recovering to finish higher above the 50-DMA located at 1.5240. With the ECB event out of the way, the correlation between GBP/USD and EUR/USD could weaken. Given the absence of the fresh economic data out of the UK today, he pair is unlikely to see much action during the European session. Wild swings could be seen once the US monthly payrolls report is out.

On the daily chart, the pair is trading at the 50-DMA located at 1.5240. However, we could see the pair dip to 1.52-1.5210 levels ahead of the NFP report as the pair is struggling to rise above 1.5250. The hourly RSI too, is bearish indicating more weakness to come. A fresh demand for Pounds could be anticipated in the case of an hourly close above 1.5250 (50% retracement of 1.4949-1.5550). In such a case the pair could rise to the 5-DMA located at 1.5294. Moreover, a weak US NFP report later today could see the pair rise to 1.5294-1.5320 levels.

USD/JPY – Could drop to 119.42 on weak NFP

The USD/JPY pair once again failed to extend gains above the resistance zone 120.30-120.50, as the US Treasury yields remained largely unchanged around 2.11%. The US dollar continues to strengthen even though the recent data out of the US has been disappointing. The Fed policymakers too, are in no hurry to raise the interest rates, despite which the bank still appears relatively hawkish when compared to the policies adopted by other major central banks across the globe. The USD/JPY pair clocked a high of 120.38 on Thursday, before ending lower at 120.04. The gains were capped by a rise in the weekly jobless claims in the US.

The Febraury non-farm report could surprise on the downside as indicated by the weaker-than-expected ADP report released earlier today, rise in the 4-week initial claims moving average to 6-week highs, and a 20% job cuts reported by Challenger Grey and Christmas. The only data that supports jobs gains is the ISM non manufacturing index, which reported a rise in employment in the service sector.

The pair has repeatedly failed to sustain gains above 120.34 (76.4% retracement of 121.82-115.55). A daily close above the same could open doors for further gains towards 121.00 levels. On the other hand, a break below 120.00 could push the pair down to 119.42 (61.8% retracement). The pair could re-test 120.34 ahead of the NRP report, although, gains could be extended only if the NFP prints higher than expected 235K, while a disappointing report is likely to see the pair drop to 119.42 levels. Further losses are unlikely as the overall NFP figure is likely to stay above 200K.