Forex market opens today with a large gap for some pairs, especially in the Yen pair. GBP / JPY opened with a down gap of 88 pips, while EUR / JPY opened with an 80 pips gap. The gap on other main pair pairs as follows:
GBP / USD 15 pips
EUR / USD 21 pips
USD / JPY 47 pips
USD / CHF No Gap
AUD / USD 53 pips
(Remarks: this value may vary among brokers)
After a high increase on Friday due to the influence of the NFP release, it looks like the market responded by pulling prices down to “normal” movements.
There are several reasons for this move. The release of the US employment report was very strong in describing continued economic strength and helping to give a solid lift to USD. As is known, the movements of several currencies on Friday exceed the general daily range, especially in currencies that pair with US Dollar. The effect of NFP that rises above the forecast (from Previous 189K to Actual 263K compared to 181K) and the Unemployment Rate that falls below the forecast (Previous 3.8% to Actual 3.6% compared to Forecast 3.8%) gives a very positive sentiment even though month per month Average Hourly Earnings (m / m) fall below the estimate (Actual 0.2% Forecast 0.3% Previous 0.2%).
Japanese Yen Become An Alternative Escape
The Japanese Yen was triumphant in trading earlier this week (6/5/19) due to an increase in demand for the currency as a safe-haven investment after a heightened relationship between the US-China which put pressure on the stock market.
Currency paired with the yen, such as USD / JPY and EUR / JPY opens trades with a gap down, conditions where there is a significant decline between the opening level today and the close of trading on Friday (6/5/19).
On Sunday (6/5/19), US President Donald Trump said he would increase import duties from China due to the Chinese nation being accused of trying to re-negotiate. The effect of Trump’s statement, China plans to cancel trade negotiations this week.
Potential Daily Strategy:
Down gaps on GBP / JPY and EUR / JPY provide opportunities for daily traders for short-term opening. After trying to close the gap at the beginning of the market opening, then again pressed down to saturation, the daily trader can take advantage of opportunities by taking a long position with a target of gap distance.
GBP / USD is being corrected to the position of the pivot price. The uptrend potential of GU is strong enough so that the right daily strategy is short selling towards a pivot level price.
EUR / USD does not show a significant potential for movement so it is likely that this pair will move in the sideways range between Support (S1) and Resistance (R1).