USD/JPY dropping like a stone

EUR

Last week on Thursday 30 May, the EUR/USD rallied and went back above 1.30 levels until it finally reached its weekly high at 1.30616. The pair was driven mostly by the contrast between encouraging macro-economic indicators from the eurozone released in the morning; and then the strong up move was triggered later in the afternoon due to worse than expected macro data from the USA. Indeed, not only the annualized US GDP weakened to 2.4% instead of an expected 2.5%, but the weekly employment figures released showed a weakening American job market. The conjuncture of these data weighed on the US dollar and helped the EUR to gain strength and rise higher for the day. On Friday, EUR/USD pulled back on end of the week profit taking.

On Monday 3 June, in the afternoon, we saw some interesting moves for the currency pair. Indeed, the EUR/USD drop has been stopped by much weaker than expected ISM Manufacturing PMI figures for the month of May in the US. From there, EUR/USD jumped back above 1.30 levels in a matter of minutes.

USD

The US dollar suffered last week and headed south. Starting on Wednesday we had poor macro-economic data released, amongst which, the annualised GDP and employment figures showing a weakening American job market.

At the beginning of this week, markets have been largely surprised by weak ISM Manufacturing PMI figures. Indeed with a release of 49.0 for the month of May against a consensus of 50.7 and a prior reading of 50.7, the figure surprised the market which reacted violently by smashing down the dollar again. The Dollar Index (DXY) is now below 83 levels.

Despite this strong down move, the major and much awaited figure to be released this week will be the Non-Farm Payroll which will be released on Friday 7 June at 2.30pm (CET).

GBP

GBP/USD closed the week slightly higher. During the first half of the week activity on the pair was low and it retested the 1.501 levels reached on 23 May, before jumping and moving up until Thursday where it reached weekly highs of 1.5239 before pulling back slightly on profits taking.

This Monday, the British pound skyrocketed against the dollar and reached a daily high of 1.5375, which level corresponds to the 61.8% Fibonacci retracement levels of the drop that occurred between the 9 and 23 May.

JPY

USD/JPY down trended throughout all last week and came back to the critical level of 100.00 on Monday morning. Unfortunately, this psychological level which was supposed to act as a support zone did not hold and the pair dropped on a series of stop losses being triggered. In a couple of minutes it reached levels seen at the beginning of the month.

For the week ahead, the economic calendar for Japan will be quite light therefore its moves will be mostly driven relatively to its major peers.

CAD

It looks like the support zone established on USD/CAD around 1.029 levels has been broken this Monday. The move has been mainly driven by the US dollar's drop after an unexpectedly weak ISM Manufacturing PMI figures released in the afternoon.

From a technical outlook, we could see further down move until 1.026 levels, but after such a violent move, we can also expect a correction, only the market will decide whether the down move will continue or not.

The US employment figures to be released on Friday will certainly be the most awaited data for Forex traders focusing on the Canadian currency.

AUD

The AUD/USD traded in a range last week. The pair was range bound between 0.969 and 0.954 all week long struggling to find a direction that has finally been found on Monday.

AUD/USD started the week strongly on weak US data, market will probably correct a little after such a violent move.

From a less technical outlook, the upcoming economic calendar for the Aussie is rather light with the AiG performance of Services Index to be released on Wednesday followed by the Trade Balance on Thursday.

NZD

Contrarily to its neighbour, the Kiwi dropped sharply on Friday. Fortunately, all of the loss has been already recovered and the pair trades now at the same levels of Friday opening as to know, 0.8095.