Another “buy-on-dips” trade today?

EURUSD, H1

EURUSD ebbed back into the mid 1.1900s and toward the four-month low that was seen on Wednesday, at 1.1937, reflecting a rebound in the dollar following the correction that was seen in the wake of Wednesday’s less-hawkish than expected Fed statement. The statement will not materially affect expectations for the Fed to high in June and beyond, and therefore the dollar is expected to remain a buy-on-dips trade. Indeed, expectations for a strong April U.S. payrolls report today, coupled with lower levels, elicited some fresh demand for the USD.

On the Eurozone side of the coin, retail sales data for March disappointed at 0.1% m/m growth, which was blamed on the “Beast from the East” snow storm, while the final April Eurozone composite PMI figure — a post-bad-weather snapshot — was unexpectedly revised lower, to 55.1, albeit fractionally from 55.2, paced by a sharp slowing in the German services PMI to 53.0 from 54.1. The timely survey data show that a cooling in what has been robust economic growth is afoot, which has taken the edge out expectations for the ECB to commence a de-stimulation of monetary policy later in the year.

Regarding the NFP, it is widely expect to rise at 190K, noting upside risks following tight initial claims data and remarkable strength in consumer confidence and vehicle sales data. Hence if the outcome beats expectations, therefore it is likely to see “trend following” mode in EURUSD . Resistance is at 1.2011-12 and support at 1.1935 and 1.1870.

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Andria Pichidi

Market Analyst

HotForex

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