If you followed the buy opportunity 1.2363 given on Monday 29th January then it is time now to place your stop loss at 1.2500 and take profit at 1.2570 in anticipation for the nonfarm payrolls.

The Euro continues to trade well above its uptrend channel of 1.1946 – 1.2140 and this give us a bullish picture for now. Fundamentals are strong enough to support the continuation of a bullish EURO.

Today we are expecting the nonfarm payrolls released by the US Department of Labor to present the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months reviews ?and the unemployment rate are as relevant as the headline figure, and therefore market's reaction depends on how the market assets them all.

Today we are expecting a reading of 180.000 much higher that previous month of 148.000 although the number can be accurate at 180.000 it doesn’t mean that dollar will become stronger. Market may react on the opposite side and the dollar to lose more ground if the The Average Hourly Earning released bythe US Department of Labor will be less than 2.6%. This is a significant indicator of labor cost inflation and

 

 

keeping in mind the FOMC released last Wednesday that even though the economic outlook is strong the FED will be focusing on the inflation number in order to maintain their normalisation policy and continue increasing rates.

EUR/USD pair can go down if both numbers are stronger than expected a reading of more than 200.000 in the nonfarm payrolls plus a better than 2.6% on average hour earning will bring sharp movement of the rate on the downside. This will be again a good buy opportunity at the same level as Monday 1.2365.

The weekly chart shows us a multi-year level of lower highs and this must be taken into considerations for the bulls. At this current level a neutral stance should be maintained.

 

Daniel Howard

Head of Investment Advice

 

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