The US Employment report is due out today at 13:30 (GMT). Non-Farm Payrolls are expected to be at 180k vs previous reading of 146k, unemployment rate to remain unchanged at 4.1% and average earnings to tick up to +2.6% yoy vs. previous 2.5%. Again, please pay attention to all three elements of the employment report as the market may react to any of the three, especially average earnings, despite the undisputed fact that Non-Farm Payrolls remain the star. Should the actual data meet the forecast, the USD should strengthen, as the forecasted data are rather favourable for the USD. However, given the last few day’s USD weakness, the reaction may be muted somewhat. Also note that, despite US finance minister Mnuchin, stating that the Davos comment about a weak dollar, did not aim at the USD exchange rates, the low US Dollar may prove to be accommodating for the US economy currently.
The EUR/USD moved in a sideways manner yesterday with some buying pressures, just breaking the 1.2495 resistance level. We expect the pair to continue to trade in sideways manner, however we see the case for the pair to experience bearish pressures, as the greenback may strengthen due to today’s employment report. Should the pair come under buying interest, we could see it reaching or even breaking the 1.2600 resistance level. On the other hand should it come under selling interest we expect it to break the 1.2495 support level and maybe even breaching the 1.2355 support level.