EUR/USD rose on Thursday near the mid-point of its recent 1.0627-1.0787 range as investors awaited Friday's U.S. employment report, with a potentially higher probability of a rally if the jobs data cooperates.
interest rates EDU2, EDM3, US10YT=RR remain off their May highs, even after rising recently, as investors reduced expectations for the terminal Fed rate.
Recent U.S. data suggests jobs growth may be slowing, including a big downside surprise in ADP nL1N2XO21A and contraction in manufacturing jobs indicated by the ISM report nN9N2WB002, reinforcing the possibility of a downside surprise in non-farm payrolls.
Other U.S. data indicates U.S. inflation may be slowing nL2N2XJ11NnZON005OHN, compounding investors' doubts that the Fed will be as hawkish as its rhetoric implies.
A disappointing jobs report USNFAR=ECI could drive U.S. rates and the dollar lower as investors expect a less hawkish Fed, potentially driving EUR/USD to break the 55-DMA, daily cloud base, 50% Fib of 1.1185-1.0349 and May 30 high and test the 1.0950 area.
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