GBP/USD Video 08.05.20.
All Eyes On U.S. Non Farm Payrolls Report
GBP/USD had a very volatile session yesterday and tested both the resistance at the 20 EMA at 1.2420 and the support above 1.2250.
Today, the pair is back to the upside mode as the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index has once again declined below the 100 level and stays in the range between 99 and 101. A move out of this range will signal that the U.S. dollar is ready for bigger moves against other currencies.
Yesterday, U.S. Initial Jobless Claims report showed that 3.2 million Americans filed for unemployment benefits in one week, while the Continuing Jobless Claims report showed that 22.6 million Americans were still unemployed.
The Non Farm Payrolls report is expected to show a loss of 22 million jobs. It should be noted that the report is not a snapshot of the current situation but it is still very important as it helps traders and investors understand what’s going on in the job market.
The Initial Jobless Claims report shows all filings but some of the laid off workers may have found new jobs in more active areas like delivery services.
Meanwhile, the Unemployment Rate report is expected to show that unemployment rate reached 16% in April. Both reports will likely have a material impact on the GBP/USD dynamics and impact other markets.
GBP/USD continues to trade in a very wide range between the support level at 1.2250 and the resistance level at 1.2650. The support level got tested yesterday, and GBP/USD received material buyer support and quickly rebounded.
The nearest resistance for GBP/USD is located at the 20 EMA at 1.2420, followed by the 50 EMA at 1.2450. I believe that the area between 1.2420 and 1.2450 will serve as one major resistance level for the pair.
In case GBP/USD is able to settle above this level, it will likely gain additional upside momentum and head towards the recent highs at 1.2650.
On the support side, the nearest major level is at 1.2250. The pair will first have to settle closer to 1.2250 before it gets a realistic chance to breach this level to the downside.