Traders focus on the US jobs report today as there is room for a surprise

The Euro has been the currency in focus yesterday as traders were anxious to hear from the ECB President Mario Draghi after the central bank’s rate decision. There has been speculation ahead of the press conference that followed the meeting that the ECB President might suggest an expansion of the current easing policy and interest was high on whether that would be the case.

Indeed Mario Draghi didn’t disappoint analysts and during his remarks opened the door for further easing driving the Euro lower across the board as the Single currency would certainly not benefit from such a development. The reaction of Single currency was a steep drop that dragged the rate at 1.1100 but nothing more than that and actually overnight the Euro tried to pull back a little bit.

The reason behind this lack of follow-through is of course that traders that reacted to yesterday’s bearish news about the Euro didn’t want to overcommit into any too important positions as today the focus will turn to the most market-moving event of the FX universe: the release of the US Non-Farm Payrolls report. The report could potentially reverse all the losses from the Euro if it printed in a manner that would disappoint Dollar bulls hence the reluctance.

Nevertheless analysts’ expectations make word for a steady printing of the US jobs report will steady performance across the unemployment and wage growth metrics. Of course there is always room for surprise and we’ve seen some figures from the US lately that missed their mark so we need to remain cautious until we get the actual reading. The important thing here is to translate the printed figures into an action – or lack of – from the Fed regarding raising their rates this month.

Taking a look at the technical outlook of the currency pairs, the Euro is trading slightly above the 1.1100 support area as we mentioned above having fallen from the 1.1200 area during yesterday’s session. A further extension of the decline could drive the Euro down to the 1.1000 support floor while a reversal and a rally to the upside should find resistance around the 1.1300 area.

The Cable remained relatively unchanged yesterday and made its way to the 1.5250 area as the release of the Services’ PMI report printed in a bearish manner, adding to the other sectors’ readings earlier in the week. Traders had already discounted this reading hence the lack of any serious reaction and now the focus is on the US jobs report that could drive the Cable below the 1.5200 level or propel it above the resistance of 1.5300.