The focus is on the Dollar today ahead of the Non-Farm Payrolls report

General market theme
Price action in the major instruments we are monitoring in our daily report was limited yesterday as investors preferred to remain cautious ahead of today’s Non-Farm Payroll report. However from the little price action we saw we have to note that the market participants they’re not too optimistic about the upcoming release even though they are eagerly awaiting today’s figures. The Dollar doesn’t show any demand ahead of the significant report and we believe that this is due to the bearishness that Janet Yellen expressed earlier in the week. Long story short, for the current negative bias on the Dollar to change a really surprising release is needed and chances are that we’re not going to see it so the Dollar remains under threat.

Price action highlights
The Euro benefited from this bearish bias on the Dollar and gained even more ground and reached the 1.1400 level yesterday but overnight a small correction took place. As we mentioned above the bias is in favor of the Single currency ahead of today’s labor figures and the Euro is a “buy on pullbacks” at this time so fresh highs should be bought unless the NFP levels skyrocket in all components which doesn’t seem likely. To the upside the first target lies around the 1.1450 area and a possible extension could take the Euro to the 1.1500 area.

The Cable didn’t have much of a price action yesterday and remained trading above the 1.4300 support level even though it printed a peak at 1.4400 at the beginning of the day. The sentiment for the British currency is not the best and the rate remains at its current levels due to the limited confidence that investors have on the Dollar. Further weakness from the US currency today on the back of the NFP report should send the Cable towards its monthly highs of 1.4500 but other than that we wouldn’t advise any longer-term positions at this time.

Focus of the day
It goes without saying that the focus today will be on the US Non-Farm Payrolls release as everyone’s attention is on the fragile Dollar at this time. Expectations make word for a steady reading above 200k and a positive uptick on the Average Hourly component but unless a really bullish surprise occurs we believe that traders will not put their support behind the US currency. Earlier in the day the UK Manufacturing PMI and the US ISM Manufacturing reports after the NFPs will not affect price action too much as everyone will be focused on the main event of the day.