Forex Signals Brief for May 4: Negative Sentiment to Weigh on Markets

US Market Wrap

The week ended in the red for most major markets and it was sentiment that kept the sellers in control.

As the COVID-19 situation comes under control in many parts of the world, the blame game has officially begun and it looks like the US has China firmly in its sights. US Secretary of State Mike Pompeo has said China concealed the severity of the virus and this is setting things up for more conflict going forward.

At the same time, US President Donald Trump said that more tariffs were ‘certainly an option’, which was something risk-assets didn’t like the sound of.

The SPX closed out the week soft while the Greenback finished red as well. The latter has opened higher after the headlines continued over the weekend.

The Data Agenda

While the start of the week appears dominated by the sentiment and US-China back and forth, the end of the week will be dominated by jobs and the state of the US economy.

Friday is, of course, the monthly US non-farm payrolls number and this time around things are going to be messy.

The expectation is for a staggering 21 million jobs lost and for the unemployment rate to jump to 16%. While these might be Great Depression-era numbers, most are also expecting a sharp recovery as the economy reopens. However, areas such as tourism and travel won’t likely see the same amount of recovery given many countries will likely maintain strict border controls.

Elsewhere, we continue to keep an eye on WTI after OPEC and its allies agreed to record output cuts in a bid to reduce the massive supply glut. OPEC feel this could see oil reclaim $40.

Forex Signal Update

The FX Leaders Team hit 8 winners from 14 trades last week, as conditions remain volatile.

Make sure you follow our live signals as we are looking at another busy week ahead.

USD/JPY – Active Signal

The USD/JPY looks very soft on the charts and the descending triangle pattern is generally a bearish one. We are short here looking for more downside.

SPX – Watching

The SPX was unable to hold the key 2,900 resistance level and sentiment has taken over. We watch and wait and see if markets can recover with all the negative headlines.

Cryptocurrency Update

Despite the upcoming halving, BTC has been unable to hold the $9,000 level for a second time and to me, that is bearish price action.

The fact that price put in a lower high under a key level is a big bearish sign technically – but, of course, the halving is bullish.

But with price being highly correlated with risk assets recently, I would suspect we need to follow the leading indicators and sit on the bear’s side for now.