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US ADP private employment grew 192k in April, above expectation of 180k. By sector, goods-producing jobs rose 47k, service-providing jobs rose 145k. By establishment size, small companies added 38k jobs, medium companies added 62k, large companies added 98k.

Year-over-year pay gains for job-stayers were little changed in April at 5%. Pay growth for job- changers fell from 10.1% in March to 9.3%.

"Hiring was broad-based in April," said Nela Richardson, chief economist, ADP. "Only the information sector – telecommunications, media, and information technology – showed weakness, posting job losses and the smallest pace of pay gains since August 2021."

Full US ADP release here.

• US nonfarm payrolls scheduled for release on Friday 12:30 GMT
• Another solid report could question rate cuts if Powell provides no clear guidance
• EURUSD at risk of plunging towards April’s low of 1.0600

April's nonfarm payrolls might cause volatility 

Friday will be a nonfarm payrolls day and investors expect the economy to have added 243k new job positions in April, keeping the unemployment rate steady at 3.8% and wage growth stable at 0.3% m/m.

The report will be the first release of the second quarter. Therefore, while the FOMC policy announcement may be the main event of the week, the data could still affect markets, particularly if Fed chief Powell offers no clarity on the rate path. Note that there will be no forecast updates during this week’s policy meeting.

Hotter-than-expected CPI inflation prints and signs of resurgence followed by hawkish Fed comments made investors think that the central bank will not cut interest rates as previously expected, at least not before November 2024.

Will Powell move the needle? 

What is more striking is that talks for a rate hike resurfaced as some policymakers, including board member Williams, did not rule out the possibility of another increase. Of course, this is currently the least likely scenario, and policymakers might need inflation, and specifically the core measures, which exclude volatile food and energy prices, to shoot higher to confirm that the progress on inflation hasn't only halted but that it's also reversing.

Yet, with divisions growing within the board about the next rate action, Powell may not change his communication tone this week but repeat his recent commentary for "higher for longer" borrowing costs. However, if he does not provide further details such as how long will the central bank wait before it becomes confident inflation is sliding back towards the 2.0% target, traders might look at Friday’s jobs data for some direction.

Another solid jobs report expected

If forecasts are correct, April’s report may not generate any concerns about the US labor market. A growth of 243k compared to 303k in March would still be an outsize jump and perhaps an encouraging sign that the labor market can handle the increased migrant inflows, especially if the unemployment rate remains stable and below 4% for the 27th consecutive month – the longest stretch since the 1960s.

It’s worthy to note that the ISM business survey has been pointing to contracting employment conditions since the start of the year. But given its somewhat broken correlation with the NFP report and the healthy number of weekly initial jobless claims, there is little risk for employment growth disappointing significantly below 200k. Moreover, excluding the pandemic’s huge loss, April’s readings have been comfortably above that threshold since 2018. Perhaps if the Q1 GDP slowdown stretches into the next quarters, employers might start trimming demand for workers.

In other metrics, wage growth might attract special attention after the Bureau of Labor statistics revealed a higher-than-expected compensation increase of 1.2% in Q1 versus 0.9% at the end of December 2023. The annual change has stabilized at 4.2%, though this is still comfortably above the pace of 3.5% which the Fed considers more consistent with achieving its price stability target. Therefore, if April’s average hourly earnings surprise to the upside or appear more sticky, there will be less need for a rate cut.

EUR/USD levels to watch

With investors trimming their 2024 rate cut projections from three to hardly one over the past month, another upbeat jobs report could overall support the case for higher for longer interest rates, adding more fuel to the dollar’s rally.

Looking at EURUSD, the pair is currently trading at the lower boundary of a bullish short-term channel around 1.0663 after getting a rejection from the 20-day simple moving average (SMA) on Tuesday. The market does not look oversold according to the technical indicators. Hence, more downside might be on the cards. In this case, the door would open for April’s low of 1.0600, while lower, the sell-off might pause near the 1.0565 former restrictive zone and then around 1.0500.

Alternatively, a wide miss in the jobs numbers might help the pair crawl higher. If the 20-day SMA gives way at 1.0711, the price might find resistance near the channel’s upper band at 1.0755 before meeting the 50- and 200-day SMAs around 1.0787.

The New Zealand dollar has steadied on Thursday, after a sharp decline of 1.5% a day earlier. NZD/USD is trading higher 0.08% on the day at 0.5890, at the time of writing.

New Zealand’s employment declines

New Zealand’s labor market is showing signs of cracks. Employment in the fourth quarter declined by 0.2% q/q, down from the 0.4% gain in Q4 2023 and shy of the market estimate of 0.3%. This marked the second decline in three months. The unemployment rate jumped to 4.3%, up from 4% in the fourth quarter and above the market estimate of 4.3%. Despite the weakness in the labor market, private sector wage growth remained high at 3.8% y/y.

How will the Reserve Bank of New Zealand react to the jobs report? The RBNZ has maintained the cash rate at 5.50% for six straight times, continuing its stance of “higher for longer”. The inflation rate fell in the first quarter from 4.7% to 4% but this remains above the upper band of the 1% to 3% target range. RBNZ policy makers will be keeping a close eye on key data, in particular inflation for second quarter, which will be released in July. Three of the four major banks expect a rate cut in the fourth quarter, while a fourth is projecting a cut in Q1 2025.

The New Zealand ANZ business confidence index fell to 14.9 in April, down from 22.9 a month earlier. Business confidence fell across all sectors and business activity compared to a year ago has decreased, with the retail and manufacturing sectors hit particularly hard.

NZD/USD Technical

• There is resistance at 0.5918 and 0.5951
• 0.5855 and 0.5822 are providing support

WTI oil price remains in red for the third straight day, deflated by growing hopes of a ceasefire agreement in the Middle East and rising US crude inventories.

Also, stubbornly high US inflation continues to cool rate cut expectations and adds concerns that demand would weaken further in current conditions.

The daily chart shows growing negative signals as bearish momentum is strengthening, the price fell below 10/20/55DMA’s, and the action is about to complete a failure swing pattern.

The price hit five-week low in early trading on Wednesday and pressuring key support at $80.00 zone (psychological / Fibo 38.2% of $67.70/$87.61 / 200DMA / top of rising daily cloud).

Bears are likely to face increased headwinds here, though overall picture is negative, with widely expected decision of the US central bank to stay on hold today and keep high interest rates for prolonged period, which would further harm demand outlook.

Sustained break of $80 zone would generate strong bearish signal for deeper correction of Dec/Apr $67.70/$87.61 rally and expose targets at $77.86/66 (100DMA / 50% retracement).

Broken 55DMA ($81.33) marks initial resistance, ahead of falling 10DMA ($82.46) and upper breakpoint at $83.99 (20DMA).

Res: 81.33; 82.46; 82.91; 83.99.
Sup: 80.00; 79.27; 78.90; 77.86.

UK PMI Manufacturing was finalized at 49.1 in April, down from March's 50.3. This decline was also reflected in four key areas: output, new orders, employment, and stocks of purchases. Furthermore, input price inflation hit a 14-month high, exacerbating cost pressures for manufacturers.

Rob Dobson, Director at S&P Global Market Intelligence, highlighted the renewed downturn, attributing the challenges to weak market confidence, client destocking, and disruptions caused by the ongoing Red Sea crisis. These factors have notably hindered the sector's ability to secure new work from key international markets including Europe, the US, and Asia.

The manufacturing downturn is prompting firms to exercise "cost caution," leading to reduced employment levels, lower stock holdings, and cutbacks in purchasing activity. Dobson expressed concern over the implications for consumer price inflation, noting that the ongoing cost pressures within the manufacturing sector are complicating efforts to return inflation to target levels.

Full UK PMI manufacturing final release here.

• Gold trends lower in the short-term picture, near oversold territory
• Stronger buying needed above 2,355 for a bullish outlook
• FOMC policy announcement due today at 18:00 GMT

Gold bears took control on Tuesday, pressing the price below the resistance-turned-support trendline, which halted last week’s decline, and towards the 200-period exponential moving average (EMA) in the four-hour chart at 2,280.

In the technical indicators, the RSI and the stochastic oscillator have stabilized their downfall near their previous lows within the oversold region and are looking for an upside reversal. That indicates an excessive bearish action, which might result in an upward correction or some stability. That said, the falling shorter-term EMAs suggest that the negative trend may continue to dominate.

Should the bears breach the floor at 2,280, support could initially develop within the 2,250-2,260 area, which includes the 23.6% Fibonacci retracement of the February-April uptrend, the lower boundary of the ongoing short-term bearish channel and the protective trendline from March 5. A step below that base could intensify selling pressures, sinking the precious metal to the 50% Fibonacci of 2,200. The 2,185 constraining zone from March could be the next pivot point.

Alternatively, there could be congestion between the 20- and 50-period EMAs at 2,311 and 2,325 respectively if the bounce off the 200-period EMA occurs. Running above the downward-sloping channel at 2,355 should be a bigger achievement and the key for a direct flight back to 2,400. Even higher, an extension above the 2,430 record high could face a barrier near 2,460.

To sum it up, there is a possibility that gold will seek to recover its positive momentum in the coming sessions because it is currently trading near a significant support zone. Still, for the outlook to brighten again, the price will have to jump back above 2,355. 

• USDJPY jumps to its highest level since April 1990
• A suspected Japanese intervention does not have meaningful impact
• Oscillators exhibit a divergence regarding overbought conditions

USDJPY has been in a steady uptrend since the beginning of the year, posting a fresh 34-year high on Monday. After a roller coaster session that day following speculation over a Japanese intervention, the pair experienced a strong sell off before recouping a significant part of its losses.

Should bullish pressures persist, the price could challenge could 159.10, which is the 161.8% Fibonacci extension of the 151.90-140.24 downleg.  Further upside attempts could then come to a halt at the recent 34-year peak of 160.20. Conquering this barricade, the bulls may attack the 200.0% Fibo of 163.55.

On the flipside, if the pair comes under selling pressure, immediate support could be found at the 138.2% Fibo of 156.35. Failing to halt there, the price could descend towards the 123.6% Fibo of 154.64, a region that put a stop to the price’s decline on Monday. Lower, the November 2023 high of 151.90 could prove to be the next barrier for the bears to overcome.

In brief, despite a potential intervention by Japanese authorities on Monday, USDJPY remains under buying pressure. Hence, the outcome of a re-test of the 160.00 handle could decide the pair’s future.

EUR/USD started a fresh decline below the 1.0695 support. USD/CHF is rising and might aim a move toward the 0.9250 resistance.

Important Takeaways for EUR/USD and USD/CHF Analysis Today

• The Euro struggled to clear the 1.0750 resistance and declined against the US Dollar.
• There was a break below a key bullish trend line with support at 1.0695 on the hourly chart of EUR/USD at FXOpen.
• USD/CHF is showing positive signs above the 0.9185 resistance zone.
• There was a break above a major bearish trend line with resistance at 0.9130 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair failed to clear the 1.0750 resistance. The Euro started a fresh decline below the 1.0700 support against the US Dollar, as mentioned in the previous analysis.

There was a break below a key bullish trend line with support at 1.0695. Besides, the pair declined below the 50-hour simple moving average and 1.0675. The pair traded as low as 1.0654 and is currently correcting losses.

The pair is showing bearish signs, and the upsides might remain capped. Immediate resistance on the upside is near the 23.6% Fib retracement level of the downward move from the 1.0735 swing high to the 1.0654 low at 1.0675.

The next major resistance is near the 1.0695 zone or the 50-hour simple moving average. It is close to the 50% Fib retracement level of the downward move from the 1.0735 swing high to the 1.0654 low.

An upside break above the 1.0695 level might send the pair toward the 1.0735 resistance. Any more gains might open the doors for a move toward the 1.0750 level.

On the downside, immediate support on the EUR/USD chart is seen near 1.0650. The next major support is near the 1.0630 level. A downside break below the 1.0630 support could send the pair toward the 1.0580 level.

USD/CHF Technical Analysis

On the hourly chart of USD/CHF at FXOpen, the pair started a decent increase from the 0.9100 support. The US Dollar climbed above the 0.9120 resistance zone against the Swiss Franc.

There was a break above a major bearish trend line with resistance at 0.9130. The bulls were able to pump the pair above the 50-hour simple moving average and 0.9185. Finally, the pair tested the 0.9215 zone.

A high was formed near 0.9216 and the pair is still showing signs of more upsides. On the upside, the pair is now facing resistance near 0.9215.

The next major resistance is at 0.9240. The main resistance is now near 0.9250. If there is a clear break above the 0.9250 resistance zone and the RSI remains above 60, the pair could start another increase. In the stated case, it could test 0.9300.

If there is a downside correction, the pair might test the 23.6% Fib retracement level of the upward move from the 0.9088 swing low to the 0.9216 high at 0.9185.

The first major support on the USD/CHF chart is near the 50% Fib retracement level of the upward move from the 0.9088 swing low to the 0.9216 high at 0.9150. A downside break below 0.9150 might spark bearish moves. The next major support is near the 0.9130 pivot level. Any more losses may possibly open the doors for a move toward the 0.9100 level in the near term.

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Market Picture

Bitcoin’s closing price on Tuesday became the lowest since late February, confirming the downward trend and falling under March and April support and the psychologically important round level.

Bitcoin ended April down 15.5% to $59.9K, after six months of gains out of the last seven (January BTC ended virtually unchanged).

Technical downside targets now look to be $55.7K (61.8% Fibonacci retracement of the rise since October) and the $51-52K area (late January consolidation area). However, both FOMC announcements later today and monthly jobs data on Friday have enough potential to accelerate or reverse the downtrend.

In terms of seasonality, May is not a good month for BTC. Over the past 13 years, bitcoin has ended a given month up on seven occasions and down six times. The average rise was 31.3%, and the average decline was 14.5%. Meanwhile, over the last three years, during May, BTC has slid 20% on average.

News background

FTX Administrators has completed its second round of Solana (SOL) token sales at a price in the neighbourhood of $100. The company sold 1.8 million SOLs in an auction format over the past few weeks.

CryptoQuant has seen no signs of Bitcoin miners capitulating despite the halving of the block reward. Mining has become dangerously centralised. One unnamed organisation holds the coins mined by nine large pools, controlling around 47% of the network’s hashrate, according to a BitMEX report.

According to SoSoValue, outflows from spot bitcoin ETFs have continued for five consecutive days. Since the products were approved on 11 January, investors have cumulatively invested $11.94 billion in these instruments. During April, there was a multidirectional flow pattern.

The passage of the US payment-stablecoin bill could surpass the approval of spot bitcoin-ETFs, according to Bitwise. The law would allow banks like JPMorgan to enter the “stablecoin” market.

Ex-Binance CEO Changpeng Zhao was sentenced to four months in prison. The US Department of Justice had demanded a three-year prison sentence.

Daily Pivots: (S1) 196.27; (P) 196.82; (R1) 197.70; More..

GBP/JPY is extending consolidation from 200.53 and intraday bias remains neutral. Outlook will remain bullish as long as 193.51 resistance turned support holds. Firm break of 200.53 will resume larger up trend.

In the bigger picture, current rally is part of the up trend from 123.94 (2020 low). Sustained break of 61.8% projection of 155.33 to 188.63 from 178.32 at 198.89 will pave the way to 100% projection at 211.65. Break of 189.97 support is needed to be the first sign of medium term topping. Otherwise, outlook will remain bullish in case of retreat.