EUR / USD- US labor data will setup the market sentiment for the next weeks

Yesterday  EUR / USD resumed its upward move towards the highs set last week. Apparently, markets want to take position for futher gains right ahead of Nonfarm Payrolls and use data as advantage of the increased volatility that traditionally accompanies this event. Given the overall fundamental background, the chances of success are very high.

The dollar fell again under the wave of sales under which investors ignored the positive statistics from the United States. It would seem that after the release of encouraging data from ADP and stronger than expected PMI data in US manufacturing sector (a fact of 59.1 with a forecast of 58.8), the dollar should at least suspend its further decline, but, as we see, this did not happen, and before an important report on the labor market, market participants again raised the price to levels in December 2016.

Partly contributed to the growth confident statistical data from the EU along with comments from ECB representatives. PMI of the EU manufacturing sector, did not exceed the forecast level (59.6), but continues to hold near the multi-year highs set at the end of last year. The same situation is with the PMI of the leading economy of the Euro- Germany.  ECB officail Novotny stated that the QE program should be curtailed by September 2018, while maintaining the current pace.

Thus, market participants are approaching Non-Farm less than 30 points from the maximum of the year at 1.2535 and taking into account the volatility traditionally accompanying this event there is no doubt that this level will be tested. However, it does not matter what atual data will be published, it only matters in the context of further price movement. The output of predicted, or higher, indicators on the growth of average wages and the number of people employed in the non-agricultural sector will help the bear to take a breath and develop a moderately corrective movement. In the case of weaker data , bulls using the weakness of the enemy will certainly drag the price to the area of ​​the new round level 1.26.

Technically, after the breakdown of resistance around 1.2450, a clear priority shifted in favor of further growth of EUR/USD. 

Our recommendations: out of the market