EUR/USD: NFP to decide on the reversal – MUFG

By FXStreet According to analysts from The Bank of Tokyo-Mitsubishi UFJ, the Non-Farm Payroll report on Friday will dictate whether recent US dollar weakness continues to reverse.

Key Quotes:

“The euro has attempted to break higher against the US dollar but has again run into more resistance above the 1.1500-level. The weak US GDP report for Q1 and the lack of a strong signal from the Fed that it plans to resume rate hikes at their next meeting in June proved sufficient to encourage the market to attempt to push the US dollar down again.”

“The breaking of key technical support levels further encouraged US dollar weakness. However, the US dollar has since rebounded supporting our view that weakness was becoming excessive in the near-term and not fully justified by fundamentals.”

“For the US dollar rebound to be sustained it will require building evidence that the US economy is rebounding as well in Q2 which would encourage Fed rate hike expectations. The main downside risk is the NFP report which if it reveals a material softening in labour market conditions could pull the rug from under the US dollar’s rebound.”

“The best scenario for the US dollar would be still solid employment growth and an …read more

Source:: FX Street