US March employment data to move the markets

With the USD remaining relatively stable yesterday, market attention today is expected to turn towards the release of the US employment report for May. The unemployment rate is expected to remain unchanged at 4.2% while the NFP figure to drop to 130k, while the average earnings growth rate to slow down to 3.7%yy. The forecasted rates and figures tend to imply further easing of the US employment market which in turn may add more pressure on the Fed to ease its monetary policy, thus weighing on the USD. Yet the actual rates and figures rarely meet their forecasts and should the US employment data for March imply a tighter-than-expected US employment market we may see the USD getting some support as it could force the market to reposition itself easing on its dovishness in regards to the Fed’s intentions.

EUR/USD was on the rise yesterday yet failed to break the 1.1450 (R1) resistance line, yet the bulls seem to persist. We intend to maintain our bullish outlook for the pair as long as the upward trendline incepted since the 13th of May remains intact. Also the RSI indicator remains above the reading of 50, yet also pretty close, implying a bullish predisposition of the market yet a possibly weak one. Should the bulls maintain control over the pair, we may see EUR/USD finally breaking the 1.1450 (R1) line and start aiming for the 1.1690 (R2) level. Yet the R1 has proven to be a formidable resistance line and should the bulls fail to advance further, we may see a correction lower for the pair’s price. For a bearish outlook to emerge, we would require the pair to break initially the prementioned upward trendline, in a first signal that the upward motion has been interrupted and continue to break the 1.1210 (S1) line clearly, thus paving the way for the 1.0940 (S2) level.

At the same time as the US employment report for May, we also get Canada’s employment data for the same month. The unemployment rate is expected to tick up to 7.0% if compared to April’s 6.9% and the employment change figure is expected to drop into the negatives reaching -12.5k if compared to April’s 7.4k. Overall, forecasts tend to imply further weakening of the Canadian employment market and should the actual rates and figures imply a wider-than-expected loosening of the Canadian employment market we may see the Loonie slipping as it may add pressure on the BoC to restart its rate-cutting path.

USD/CAD stabilised yesterday testing the 1.36454 (S1) support line. We maintain our bearish outlook for the pair as long as the downward trendline incepted since the 15th of May remains intact. Should the bears remain in charge we may see the pair breaking the 1.3645 (S1) line and start aiming for the 1.3420 (S2) support level. For a bullish outlook to be adopted, we would require the pair to break initially the prementioned downward trendline, in a first signal that the downward motion has been interrupted and continue to break the 1.3815 (R1) line clearly, opening the gates for the 1.3975 (R2) resistance barrier.

Back in the US, the Trump-Musk bromance is imploding and the issue tends to create a general uneasiness in the markets. On Trump’s side threats were made to terminate Elon’s Governmental Subsidies and Contracts. Elon Musk posted on Twitter that the real reason why the Epstein files have not been made public is that Trump is included in the files, which implies that the US President should be set on trial. The issue weighed on Tesla’s share price yet White House officials seem to have brokered a telephone call today and should the tensions ease, we may see Tesla’s share price recovering some ground.

Other highlights for the day:

Today we get Germany’s industrial output for April, UK’s Halifax House prices for May and Euro Zone’s revised GDP rate for Q1, while ECB President Christine Lagarde speaks. On Saturday BoJ Deputy Governor Uchida, ECB President Lagarde and ECB Board Member Schnabel speak. On Monday we get Japan’s GDP rate for Q1 and current account balance for April and China’s trade and inflation data for May.

EUR/USD Daily Chart

• Support: 1.1210 (S1), 1.0940 (S2), 1.0730 (S3)
• Resistance: 1.1450 (R1), 1.1690 (R2), 1.1905  (R3)

USD/CAD  Daily Chart

• Support: 1.3645 (S1), 1.3420 (S2), 1.3285 (S3)
• Resistance: 1.3815 (R1), 1.3975 (R2), 1.4100 (R3)

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