Trading plan for 05/01/2018

The EUR/USD pair is moving down slowly at 1.2060 after yesterday's failure to violate the September highs at 1.2090. USD/JPY carried out a successful attack on 113, which was helped by correction of stock exchange indexes. The Nikkei225 increased by 0.9% today, following the green results of Thursday's sessions in Europe and on Wall Street.

On Friday 5th of January, the event calendar is rich in important news releases. The main event of the day is the US job market report in form of Non-Farm Employment Change, Unemployment Rate, Average Hourly Earnings and Participation Rate data. Moreover, the market participants will get familiar with German Retail Sales data, Eurozone CPI data, US ISM Non-Manufacturing PMI data and Canadian Trade Balance and Unemployment Rate.

EUR/USD analysis for 05/01/2018:

A bunch of the US job market data is scheduled for release at 01:30 pm GMT and the market participants are expecting the headline NFP-Payrolls number to drop from 228k to 190k, the Unemployment Rate to stay unchanged at 4.1% and the Average Hourly Earnings to jump from 0.2% to 0.3% on a monthly basis. Strong ISM for industry and strong ADP indicate that the economic situation in the US is good, which should translate into a further increase in the number of employees. However, for the interpretation of the NFP report by the markets, it is still more important if the pressure on wage growth is coming behind new jobs, which will trigger inflation and give grounds for further Fed rate hikes. In this topic, the data already published this week do not contribute much, although the risks for USD prevail on the positive side.

Let's now take a look at EUR/USD technical picture at the H4 time frame before the NFP-Payrolls data are released. The market has hit the technical resistance at the level of 1.2090 and pulled-back a little in the direction of the nearest support at the level of 1.2034. There is a clear bearish divergence between the price and the momentum indicator in overbought market conditions, so if the US job market data will beat the market participants, then the price might drop lower towards the level of 1.20003 or even below it.

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Market Snapshot: USD/JPY at the key resistance

The price of USD/JPY has hit the key technical resistance at the level of 113.09, just below the golden trend line resistance. Any breakout higher, fueled by the better than expected US job market data, will likely result in a test of the next technical resistance at the level of 113.50 - 113.74.

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Market Snapshot: GOLD pulls-back lower

The price of gold has pulled back from the recent highs at the level of $1,325 and now is getting closed to test the technical support at the level of $1,315. Nevertheless, the daily trend remains bullish and another higher high is expected at this market after the pullback is terminated.

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The material has been provided by InstaForex Company - www.instaforex.com