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6 March Forex daily review

Sergiy Zlyvko
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On Thursday, trading in the foreign exchange market was calm until 12.45 GMT. After the central banks announced their decisions on monetary policy, investors’ attention shifted to the press conference of ECB chairman Mario Draghi.

As expected by the market, the Monetary Policy Committee of the Bank of England decided to leave unchanged the interest rate and amount of assets purchase. The Governing Council of the ECB also decided monetary policy to be unchanged and left interest rates at the level of 0.25%. Euro reacted by moderate growth on the ECB’s decision. Pound due to the growth of EURGBP cross-rate was under pressure until the end of European session.

Sharp rise of EURUSD followed during Mario Draghi’s performance. There was no key statements. Draghi said that the Eurozone’s economic recovery coincides with the estimates and inflation risks remain limited. He added that the economic recovery will be slow. EURUSD has appreciated by 120 point to 1.3855.

Today is significant for foreign exchange market. On Friday at 13.30 GMT U.S. is going to publish a report on the labor market. We’re always in Non-Farm Payrolls day expect flat to 13.30 GMT as the main scenario.

Yesterday the euro successfully entrenched against the U.S. dollar, the Swiss franc and the Australian dollar. Corrective pullback may reach 40 points against these currencies. According to my estimates, EURUSD retraced to 1.3825, USDCHF – to 0.9075 and AUDUSD – to 0.8820. GBPUSD may even be strengthened against correction EURGBP cross, but we think that by 13.30 GMT the pair can return to 1.6735.

It is expected that the U.S. in February was created 154 thousand new jobs outside an agricultural sector against 142 thousand in January. The unemployment rate is projected to be 6.6%. If rebounds on major currency pairs will be sharp after yesterday’s growth, it will mean that market participants expect good value of NFP. Someone may just want to leave the market before an important report.

If the value of NFD is lower than expected, the dollar will continue to fall to new lows. If NFP is above the 154 thousand, then it is necessary to look at how this value will exceed the forecast and in what direction values of the previous two months will be revised.

In Asia, the market was calm. EURUSD is trading at 1.3880. Nothing prevents euro to move up but report NFP can. If you take Fibonacci level from yesterday’s growth, 38.2% correction is obtained at the level of 1.3815. This is good price level at which you can wait for report release.

GBPUSD is trading on 1.6750. On Thursday refloat was limited by the growth of EURGBP cross-rate. Sideways trend lasts from February 17 and it’s time to get out of it. Border is wide, so the price today is unlikely to come out of it. The boundaries of the price band are at the levels 1.6560-1.6830. In the case of strong report, British pound will go to the bottom of the channel. With a weak report the pound will head to the upper boundary of the channel.

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