USD On The DeclineThe January US labour reports are due later today and hold the potential to cause big market volatility. The Dollar has come under heavy pressure this week amidst the narrative that the policy gap between the Fed and other central banks in the G10 is rapidly closing. An uptick in hawkishness from the BOC, ECB and BOE is eroding bullish sentiment towards USD. With this in mind the stage is set for today’s NFP release. Simply put, it will take a strong upside beat today to help reversed USD’s fortunes near-term. However, if we see a weak set of numbers, this might act as an accelerant, sending USD lower at a faster pace.In terms of forecasts, the market is looking for the headline NFP to come in at 145k, down from 199k prior, average hourly earnings to drop to 0.5% from 0.6% prior and the unemployment rate to remain unchanged at 3.9%. So, already, not a very optimistic set of forecasts, perhaps setting the tone for further USD weakness? Let’s see!Where to Trade US Labour Reports?EURUSDThe pair has seen a dramatic shift in sentiment this week thanks to a hawkish surprise from the ECB yesterday. EURUSD is now trading sharply higher following the rebound off the 1.1190 lows. Price is fast approaching the key 1.1527 level and, with both MACD and RSI rising sharply, a disappointment for USD bulls today might be enough to fuel a break higher. Bulls can look to target 1.1703 initially above that level and 1.1840 thereafter.
Source: Tickmill
