The dollar selling gathered pace in the NY session on Thursday and was revived again in the European session today, pushing the EUR/USD pair to a high of 1.0990 ahead of the all important US non-farm payrolls release.
The spot flirted with 1.0845 (61.8% of 1.0517-1.1376) earlier this week before the bullish move began. The common currency also received a boost from reports of a limited ECB action next week.
Focus on payrolls figure and wage growth
The lead indicators are painting a mixed picture. The initial jobless claims average dipped in February. Meanwhile, the labor market situation under manufacturing sector improved somewhat. However, service sector employed dipped in February. Given, the service sector is a major contributor to growth, a dip in employment leaves the doors open for a downside surprise in the NFP.
The markets expect the data to show the economy added about 190K jobs in February. The unemployment rate is seen unchanged at 4.9%. The focus is also likely to be on the wage growth figure, which had saved the day for the USD bulls last month. Wage growth is seen slowing down in February.
A strong payrolls report could provide relief to USD rally and push EUR/USD pair back to 1.0845 levels ahead of the next week’s ECB meeting. Meanwhile, a weak payrolls figure trigger another wave of selling in the USD, taking the EUR/USD pair well above 1.10 handle.
EUR/USD Technical Levels
The spot is currently trading around 1.0980 levels. The immediate hurdle is seen at 1.10 (psychological number + rising trend line resistance on daily chart), which if breached could see the spot make an attempt at major hurdle of 200-DMA at 1.1045 + 1.1048 (38.2% of 1.0517-1.1376). The pair needs to close above the same in order to continue its ascent towards 1.1173 (23.6% of 1.0517-1.1376).
On the other hand, a breakdown of immediate support at 1.0947 (50% of 1.0517-1.1376) would expose 100-DMA at 1.0928, under which the spot risks sliding towards 1.0845 (61.8% of 1.0517-1.1376).
(Market News Provided by FXstreet)