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The US jobs report for July is due on Friday at 1230 GMT, with the release widely viewed as the most important monthly print out of the world's largest economy since the global financial crisis. Overall, a relatively healthy labor market is anticipated by analysts, with wage growth data again attracting the lion's share of attention.

According to economic forecasters, the US economy added 190k positions during July, something which may on the one hand point to weakening jobs growth compared to June's 213k, but on the other hand still constitutes a robust number. Meanwhile, the unemployment rate is projected to tick down to 3.9% – not far above May's 3.8% which matched a low last recorded in April 2000 – after climbing to 4.0% in June. It should be kept in mind though, that June's uptick was owed to a rise in the participation rate to 62.9%, as individuals reentered the labor force. For the record, the participation rate has not been above 63.0% since early 2014.

Turning to average earnings, which are again expected to be in the spotlight, they are projected to expand by 0.3% m/m – above June's 0.2% –, something which would maintain the year-over-year pace of growth at 2.7% for the third straight month.

Firmer wage growth figures as reflected by the reading on average earnings have the capacity to spur price pressures and thus lead to a more aggressive Fed tightening cycle, consequently boosting the greenback. At the moment, Fed funds futures show that market participants have fully priced in an additional 25bps interest rate increase by the US central bank in 2018, while they assign a more than 60% chance for a second one, which would put the total number of quarter percentage point rate hikes during the year at four. Relatively strong wage growth on Friday can push those odds further up, with the opposite holding true as well.

In terms of the market's reaction to the release and focusing on USDJPY, upbeat figures, especially on the wage front, are expected to elevate the pair. Given a decisive break above the 112 round figure that would propel the pair above Wednesday's near two-week high of 112.14, additional resistance could be met around the seven-month high of 113.16 from July 19; the area around this level also encapsulates the 113 handle. On the downside and in case of disappointing data, support may come around the 23.6% Fibonacci retracement level of the March 26 to July 19 upleg at 111.12, including the 111 mark. Further below, the attention would turn to the current level of the 50-day moving average at 110.66.

The US-China trade spat is back on the table, with the Trump administration ratcheting up tariff-pressure on the world's second largest economy. Deliberations on this front are also of importance for FX markets, with USDPJY likely to prove sensitive to developments; the yen may be on the receiving end of safe-haven flows on the back of rising tensions and vice versa. In the meantime, data pertaining to June's trade balance will be made public out of the US alongside Friday's employment readings; the relevant deficit is predicted to widen to $46.5 billion, from May's $43.1bn.

Lastly, out of Friday's jobs report, it would be interesting to see to what extent tariff actions are so far affecting the US labor market landscape. For example, the US metals industry gained employment in June, which seemed to have been related to the tariffs on steel and aluminum. Should metal consumers start feeling the burn of higher costs though, then this might translate into weaker manufacturing jobs growth in upcoming months.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.16911
Open: 1.16591
% chg. over the last day: -0.24
Day's range: 1.16308 - 1.16676
52 wk range: 1.0571 – 1.2557

Yesterday's trading on currency majors was quite active amid the Fed's meeting. The regulator kept the key interest rate range at 1.75% -2.00%. The Central Bank noted the stability of the labor market and sustained economic growth. At the moment, the bearish sentiment is prevailing on the EUR/USD currency pair. The key range is 1.16250-1.16550. We recommend opening positions from these marks.

The news feed on 2018.08.02:

Today, the publication of important economic reports from the US and the Eurozone is not planned.

Indicators point to the power of sellers. The price has fixed below 50 MA and 200 MA.

The MACD histogram is located in the negative zone and below the signal line, which indicates a bearish sentiment on the EUR/USD currency pair.

Stochastic Oscillator is in the oversold zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.16250, 1.16000
Resistance levels: 1.16550, 1.16750, 1.17000
If the price fices below 1.16250, the EUR/USD quotes are expected to fall further. The movement is tending to 1.16000-1.15750.

Alternative option. If the price fixes above the resistance level of 1.16550, it is necessary to consider buying EUR/USD. The movement is tending to 1.16750-1.17000.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.31179
Open: 1.31158
% chg. over the last day: -0.02
Day's range: 1.30676 - 1.31285
52 wk range: 1.2361 – 1.4345

At the moment, the GBP/USD quotes show a negative trend before the meeting of the Bank of England. Attention of investors will be focused on the decision of the Central Bank on the key interest rate and comments by regulator representatives. The key support and resistance levels are 1.30700 and 1.31100, respectively. The positions must be opened from these marks.

The news feed on the UK economy:

Index of economic activity in the construction sector at 11:30 (GMT+3:00);

The Bank of England's decision on the key interest rate at 14:00 (GMT+3:00).

Indicators point to the power of sellers. The price has fixed below 50 MA and 200 MA.

The MACD histogram is in the negative zone and below the signal line, which gives a strong signal to sell GBP/USD.

Stochastic Oscillator is located in the oversold zone, the %K line has crossed the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.30700, 1.30300, 1.30000
Resistance levels: 1.31100, 1.31400, 1.31700

If the price falls below the support level of 1.30700, the GBP/USD price drop is expected. The movement is tending to 1.30300-1.30000.

Alternative option. If the price fixes above 1.31100, it is necessary to consider buying GBP/USD. The movement is tending to 1.31400-1.31700.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.30117
Open: 1.29988
% chg. over the last day: -0.06
Day's range: 1.29937 - 1.30208
52 wk range: 1.2059 – 1.3795

Since the beginning of this week, USD/CAD has been moving in a flat. A unidirectional trend is not observed. Investors expect additional drivers. At the moment, the key support and resistance levels are 1.29800 and 1.30300 respectively. We recommend opening positions from these marks.

The news feed on Canada's economy is calm.

Indicators do not send accurate signals. The price has crossed 50 MA.

The MACD histogram is near the 0 mark.

Stochastic Oscillator is located in the overbought zone, the %K line has crossed the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.29800, 1.29500
Resistance levels: 1.30300, 1.30750, 1.31200

If the price fixes below the support level of 1.29800, the USD/CAD quotes are expected to fall. The movement is tending to 1.29500-1.29250.

If the price fixes above the 1.30300 mark, you need to look for entry points to the market to open long positions. The target movement level is 1.30750-1.31000.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 111.787
Open: 111.709
% chg. over the last day: -0.21
Day`s range: 111.519 - 111.734
52 wk range: 104.56 – 114.74

On the USD/JPY currency pair there is an ambiguous technical pattern. At the moment, quotes are consolidating. The trading instrument is testing local support and resistance levels: 111.400 and 111.700. The positions must be opened from these marks. We recommend paying attention to the yield of US government bonds.

The news feed on Japan's economy is calm.

Indicators do not send accurate signals. The price has fixed between 50 MA and 200 MA.

The MACD histogram is in the negative zone, but above the signal line, which gives a weak signal to sell USD/JPY.

Stochastic Oscillator is located in the neutral zone, the %K line is above the %D line, which indicates the growth of USD/JPY.

Trading recommendations

Support levels: 111.400, 111.000, 110.650
Resistance levels: 111.700, 112.000

If the price fixes below the 111.400 level, the USD/JPY currency pair is expected to fall. The movement is tending to 111.000-110.700.

Alternative option. If the price fixes above the level of 111.700, it is necessary to consider buying USD/JPY. The movement is tending to 112.000-112.250.

UK PMI construction rose sharply to 55.8 in July, up from 53.1 and beat expectation of 52.8. Markit noted the robust and accelerated rise in construction activity Housing building expanded as the fastest pace since December 2016. Also, rates of new order growth and job creation gain momentum.

Tim Moore, Associate Director at IHS Markit and author of the IHS Markit/CIPS Construction PMI®:

"July data reveal an impressive turnaround in the performance of the UK construction sector, with output growth the strongest for just over one year. While the recent rebound in construction work has been flattered by its recovery from a low base earlier in 2018, there are also signs that underlying demand conditions have picked up this summer. New business volumes expanded at the strongest rate since May 2017, while workforce numbers increased to the greatest extent for just over two-and-a-half years.

"House building was the bright spot for construction growth in July, alongside a stronger upturn in commercial development projects. Residential activity and commercial work both increased at the sharpest pace since December 2015, which contrasted with another subdued month for civil engineering.

"UK construction companies experienced substantial cost pressures in July, driven by rising fuel bills and higher prices for steel-intensive items. Meanwhile, supply chains struggled to keep up with greater demand for construction products and materials, which resulted in the greatest lengthening of delivery times since July 2017."

Full release here.

Also release in European session, Eurozone PPI rose 0.4% mom, 3.6% yoy in June. Swiss PMI manufacturing rose 0.3 to 61.9 in July. Swiss retail sales rose 0.3% yoy in June. Swiss SECO consumer confidence dropped sharply to -7 in July.

• Fed decided to stick to their guns
• The dollar index is still holding on to its gain
• BOE is expected to increase the interest rate by twenty-five basis points

US futures are trading lower as investors weighing the new threats from Donald Trump. Trump administration has upped the game, it is considering to step up the pressure on Beijing by increasing the trade tariffs further on Chinese good to 25 percent from 10 percent. As we said before, Trump thinks that putting the gun to the head technique works but he is oblivious, this is China, not North Korea. The president wants China to come back to the negotiation table. Thus, the trade tensions are making investors risk-averse today while investors digest the Fed's interest rate decision.

Last night, the Fed decided to stick to their guns. The Fed is staying on course with two more rate hikes this year. The Fed members decided unanimously that they are going to leave the interest rate unchanged for now, something which was already communicated to the market. Hence, the dollar reaction wasn’t that enthusiastic but it still experienced some upward movement.

The dollar index is still holding on to its gain and this mainly due to the reason that the Fed sent one clear signal for investors yesterday that the borrowing cost is going higher. In other words, the idea of cheap money should be forgotten.

The reality is that the Fed cannot afford to remain reticent while the economic growth is firing on all cylinders. The Fed has also shown their confidence towards the economic outlook and they believe that the risk to the outlook is broadly balanced. So far, it is almost given that the Fed would increase the interest rate during their next meeting in September.

Yesterday's ADP Non-Farm Employment Change data has set a strong tone about the upcoming NFP number. The ADP reading confirmed a much better reading of 219K confirming a strong labour market condition in the private sector. The hawkish Fed stance and sturdy ADP reading have not provided enough tailwind for the dollar index to reclaim its previous high of $95.62 but the move certainly has the potential to push the index above the $95 mark again. A strong US NFP data tomorrow could provide further aid for the dollar index. The expectations are for 190K while the previous reading was at 213K.

Back in the U.K., it is the Bank of England’s turn to make a decision about their interest rate. It is widely expected that there will be smoke coming out of the Bank of England’s gun. Mark Carney, the governor of the Bank of England, is expected to increase the interest rate by twenty-five basis points to 0.75%.

It may not be a unanimous decision as we expect one rebellion to oppose this decision. The overall vote decision could be 8-1. What would drive the sterling higher or lower would be the bank’s outlook about the country’s GDP and inflation amidst the Brexit turmoil.

Having said this, we are talking about Mark Carney here and if he is known for anything, it is this that he has the ability to dodge the bullet. So even though, it is almost fully priced in that he would increase the interest rate today, but in all reality, he may actually hold the fire.

Nonetheless, the UK's economic data is telling a compelling story and it is evidently clear that the economic weakness in the Q1 was more of a temporary effect rather than an actual issue. Mr. Carney did say that half of his time is consumed in figuring out the Brexit. Surely, he would have to answer many questions on this and provide further clarity on the bank's current position about Brexit.

What Carney cannot afford to let it happen is the strength in the British currency, especially today- on the day of the interest rate decision. But we have seen this film way too many times and these central bankers are on top of their game when it comes to managing the currency expectations during such events. We believe that the Bank of England would strike a dovish tone in their statement and it would tame all the Sterling bulls out there.

EUR/USD

Current level - 1.1650

The intraday bias remains bearish and a break through 1.1620 will challenge 1.1570 low. Crucial on the upside is 1.1700.

USD/JPY

Current level - 111.59

The failure at 112.10 hurdle led to a corrective pullback and intraday there is a chance for a dip to 111.25 before anothe leg upwards, to 112.65.

GBP/USD

Current level - 1.3101

The pair is ready for a break through 1.3080 zone, towards 1.3030 area. Initial  resistance lies at 1.3140.

Today is a big day for the GBP. The market is expecting a rate hike of +0.25 % from 0.50% to 0.75%. The decision is an interest rate at which the BOE lends to financial institutions overnight. The hike seems to be priced in the market but according to the latest inflation and data, the hike might not be justified.

Above 146.38 the GBP/JPY could spike to 147.50, while below 145.77, we could see 144.68. The BOE event is scheduled for 11 AM GMT, and huge volatility is expected.

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Daily Camarilla Pivot (Daily Support)

D L4 – Daily H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

The Australian dollar holds firmly in red on Thursday and extends weakness of the previous day, denting key near-term support at 0.7370 (27 July low/Fibo 61.8% of 0.7317/0.7464 upleg). Upbeat Australian trade balance data (trade surplus widened to A$1.87 B vs A$ 0.9B f/c) had little positive impact on the pair

Rising fears of intensifying US-China trade tensions, keep the Aussie, China’s sentiment liquid proxy, under increased pressure.

Fall of Chinese equities by 2% adds to negative outlook.

Bearish technical studies support the notion as momentum formed bear-cross and broke into negative territory and RSI turned south from neutral zone, as the price broke below a cluster of converged MA’s.

Firm break below 0.7370 pivot would spark fresh weakness and risk retest of key supports at 0.7317/10 (20/02 July lows respectively). Upside attempts should be capped at 0.7400 zone to keep bears intact.

Res: 0.7389, 0.7400, 0.7429, 0.7440
Sup: 0.7359, 0.7343, 0.7317, 0.7310

The USDTRY pair rallies in uncharted territory after strong rally on Wednesday eventually broke above psychological 5.00 barrier and extended higher on Thursday.

Lira was weakened significantly after last month’s CBRT action and entered free fall on US sanctions on Turkey.

Threats of further sanctions that could sour US/Turkey relations keep traders cautious and increase pressure on lira. Turkey’s inflation data are due on Friday, with forecast for 0.9% rise in July (compared by 2.6% rise in June), keeping investors on high alert, on strong fears that inflation has risen much higher that estimated.

Fresh rally pressures barriers at 5.10 (round-figure) and 5.1107 (Fibo 138.2% projection) and could extend towards 5.20 and 5.2240 (Fibo 161.8% projection), as analysts already operate with 5.50 level.

Meanwhile, minor corrections could be expected on overbought daily studies.

Res: 5.0920, 5.1000, 5.1107, 5.2000
Sup: 5.0406, 5.0000, 4.9736, 4.9594

Pivot (invalidation): 1.1670

Our preference Short positions below 1.1670 with targets at 1.1650 & 1.1635 in extension.

Alternative scenario Above 1.1670 look for further upside with 1.1700 & 1.1720 as targets.

Comment A break below 1.1650 would trigger a drop towards 1.1635.

Pivot (invalidation): 1.3140

Our preference Short positions below 1.3140 with targets at 1.3080 & 1.3050 in extension.

Alternative scenario Above 1.3140 look for further upside with 1.3170 & 1.3190 as targets.

Comment The RSI calls for a new downleg.