FOREX: Stellar US Employment and Souring Risk Prompt USD Surge

US President Donald Trump is shortly due to deliver remarks at a White House event marking Mother's Day. LIVESTREAM  The event is Trump's first public appearance of the day and could include ad hoc remarks to the press regarding a flurry of market-moving headlines related to diplomacy with Iran. 

• Trump has no other scheduled public events today. He has an intelligence briefing with his national security team scheduled for 15:30 ET 20:30 BST, which could be followed by statements on social media. 

• RES 4: 111-31   50.0% retracement of the Mar 2 - 27 bear leg
• RES 3: 111-27+ High Apr 17 and the bull trigger 
• RES 2: 111-09   50-day EMA
• RES 1: 110-28+ 20-day EMA 
• PRICE:‌‌ 110-26 @ 17:21 BST May 06
• SUP 1: 110-00+ Low May 4
• SUP 2: 109-24   Low Mar 27 and the bear trigger
• SUP 3: 109-22+ 1.764 proj of the Mar 10 - 13 - 18 price swing
• SUP 4: 109-12   2.000 proj of the Mar 10 - 13 - 18 price swing

A bearish theme in Treasuries remains intact and for now, gains are considered corrective. MA studies are in a bear-mode position, highlighting a dominant downtrend. Initial resistance points to watch are; 110-28+, the 20-day EMA (a level pierced on Wednesday’s intraday rally), and 111-09, the 50-day EMA. A clear break of both averages would highlight a possible reversal. The bear trigger is 109-24, the Mar 27 low. Clearance of this support would confirm a resumption of the downtrend. 

• A fresh round of optimism over the near-term prospects of a US-Iran deal was triggered by an Axios report said to say the two sides were nearing agreement on a 'one-pager' that could set the course for an end to the conflict. How viable the one-pager will be may become clear ahead of Trump's visit to Beijing next week (May 14 - 15) - before which the President is likely to want to engage in positive discussions on trade.
• The USD traded weaker on the subsequent risk rally, helping boost NZD/USD further, which hit 0.5991 for a fresh multi-month high. EURUSD's parallel rally stopped out into the 1.1800 handle, above which 1.1849 marks the April 17 high and bull trigger. This keeps the near-term outlook constructive.
• EURJPY traded well off lows, despite strong evidence of further Japanese intervention. The cross touched 182.05 in the initial pullback, but a global equity rally on Iran de-escalation boosted the cross near 200 pips off lows through the European close.
• The latest leg lower for the USD again has USDCNH pressuring new May lows, narrowing the gap with 6.8059. It's at these levels that Chinese authorities may again begin to work to contain unwarranted CNY strength as the exchange rate approaches the strongest levels in over three years.
• While the Bank are unlikely to resort to broad measures like rate cuts to target the FX rate specifically, there remain a number of 'macroprudential adjustment parameters' that could be leant on to work against unwanted CNY appreciation - namely tweaks to banks' interactions with FX forwards via a higher FX Reserve Requirement Ratio or by lower FX forward deposit requirements - freeing up FX funding in the process.
• US weekly claims and construction spending data cross tomorrow. Thursday also sees a busy central bank schedule. ECB's Kocher, Muller, Villeroy, de Guindos & Schnabel all make appearances at a London conference, while Fed's Kashkari & Hammack also speak.