In this video I go over my view for the EUR/USD pair, quite bearish, as price in the daily chart continues to be well below the 200-ema, and we started the week piercing key support levels at 1.30 and 1.2975. I have been bearish on this pair from the macro side throughout all of April, but it was held up by sideways equities and general slow labored rally. A breakout below 1.30 handle opens up downside target toward 1.2640, or we may see a retracement up-move where we will want to look to fade rallies.

April’s NFP report will be important as it should set the tone for the general financial markets and the USD over the next few weeks. That is because it will give us clues as to what’s next for Fed policy – will they ease or not. Looking at the 3 leading labor market indicators – the employment sub-gauges within the ISM reports, jobless claims, and the ADP employment change – we tend to hold a bias that the NFP data should disappoint the consensus forecast and come in weaker, between 150K-160K. That should result in a weaker USD and risk aversion. However, a beat would give us a day in which both equities and the USD are stronger, a tandem we don’t often see together.

The ISM Manufacturing data that came out on Tuesday 10:00AM EDT was better than expected and pushed the USD/JPY higher. April ISM Services PMI came in 53.5 disappointing expectation of 55.5, and coming in lower than March’s 56.0 reading. The USD/JPY was rallying before this release, and the initial reaction is resistance against the rally…

Today the FOMC concludes its 2-day meeting and will update its forecasts for growth, unemployment, and inflation. The market will be closely analyzing the statement for any changes to language which could hint at more easing, while FOMC Chairman Bernanke will answer questions and give guidance as to what the FOMC is thinking going forward. This has the potential to be a non-event if Bernanke and the FOMC doesn’t move much from their March meeting, but could also be significant if there is a move towards more (or less) chance of QE.