After moving flat following the publication of the minutes of the FOMC meeting, the US dollar went 'rampant' again in the New York session yesterday. What happened?
The strengthening of the currency king was due to the release of US ADP employment data which measures the private sector for last December.
The data reading jumped higher than the previous month at 235,000 compared to 182,000, and was well ahead of the forecast of a lower figure of 152,000.
This situation gives a positive signal ahead of the NFP report today (Friday), but the outlook for the latest data reading is gloomy.
Although the US dollar has strengthened again, investors will remain cautiously waiting for the NFP report to be published while also being prepared for the uncertain price movements that will occur.
The price chart of the EUR/USD currency pair has seen a daily decline of around 100 pips on Thursday yesterday from a high of 1.06300 to reach back around 1.05200 as usual.
Dropping below the 1.06000 zone and crossing the Moving Average 50 (MA50) level on the 1-hour time frame on the EUR/USD chart gives a bearish signal for the price.
If the strengthening of the US dollar is successfully maintained, the price will continue to decline further testing the support zone at 1.05000.
The price that managed to penetrate the zone is then expected to head towards around 1.04000 and will record the latest 5-week low.
However, if there is a rebound in prices after the NFP report is published, the 1.06000 zone is expected to display an attractive price reaction before a trend change signal is evaluated.
Continuing the climb higher would expect the price to head back to the previous resistance zone at 1.07000.
