Most currency pairs are consolidating ahead of today´s NFP release, with the event likely to determine the short-term direction of the US Dollar. A strong NFP print could increase pressure on the Federal Reserve and the odds of an earlier rate hike would push bond yields higher, along with the Greenback.
If that is the case, USD/JPY is a currency pair to watch as the Dollar is likely to gain the most against low-yielding currencies, such as the Japanese Yen. Looking at the Daily chart, the broad uptrend clearly remains intact. 109.70 is the next major hurdle for Dollar bulls to overcome, and a breakout would pave the way for another test of the March 2021 high at 110.95.
Should strong employment data trigger the next leg higher in the US Dollar, some currencies could be more resilient than others. The Canadian Dollar has been benefiting from a broader rally in commodities that looks almost unstoppable at the moment, and this should keep the CAD supported in the near-term.
We discussed USD/CAD on Monday, noting that it looks heavily oversold in the short-term. Despite that, the currency pair extended losses. While a strong NFP figure has the potential to trigger a short squeeze that could push the price back to 1.2270, strong fundamentals will keep the Canadian Dollar in demand and cap the USD/CAD topside at 1.2350, where sellers are likely to return in greater numbers.
Gold prices have surged as investors turned risk averse amid rising inflation fears. A weak NFP print would benefit the precious metal as a declining Dollar would give Gold an additional boost. At the same time, the metal is likely to remain in demand as an inflation hedge.
XAU/USD cleared a major obstacle at $1800 resistance. This has paved the way for a test of the 200 DMA near $1857 and could potentially signal the end of a prolonged period of consolidation ($1676-$1800 range). To the downside, Gold bulls will have to defend the $1800 line, as a break below it would confirm the false breakout and trigger profit-taking from nervous speculators.
Ethereum has been marching higher this week, leaving even Bitcoin in the dust. ETH has been benefiting from the broad cryptocurrency frenzy, increased adoption of Ethereum and rising interest from institutional investors. Could this be the moment where Ethereum steals the spotlight from Bitcoin and becomes the new favourite for investors? This could take more time, but nevertheless ETH´s rally is impressive and the charts are pointing at further gains ahead.
Looking at the hourly chart, imminent support can be expected at the rising trendline from Monday´s low, followed by the major support zone between $3160 and $3222. To the topside, ETH/USD could face stronger resistance at $3550, but a clear break above would pave the way for a rally towards $5000.
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