EUR bulls crossing fingers ahead of NFP

FXstreet.com (Barcelona) - What looked like another sharp sell-off on Thursday, all of the sudden became a needle-like correction higher for the EUR/USD, climbing more than two big figures to test the boundaries of 1.2950. It is worth noting however, that ECB’s Draghi sounded quite dovish in his statement yesterday, arguing that the EMU recovery for the second half of this year would now be facing stronger headwinds. Draghi also emphasized that the Council did not discussed a rate cut at this time, maybe bringing the much needed spark that euro-bulls were longing for.

… Payrolls, a double-edged sword

Ahead of today’s Non-farm Payroll in the US economy (200K exp.), the risk may be slightly tilted to disappointing figures, if we take into account the recent ADP result, arguing that the US private sector added 158K jobs in March vs. 200K forecasted and February’s 237K.

Against market chat speculating on the timing and direction of the next move by the Fed, a result above the median today would likely hamper the extension of the recent up-move prompting traders to quickly unwind long positions, as the perception of the Fed scaling back its balance sheet would gain traction.
On the flip side, a poor result could give extra impulse to yesterday’s post-ECB rally, eyeing the psychological limestone of 1.3000 as first target.

In the meantime, the cross has broken above the 2-month downtrend line, rapidly leaving behind the key 200-day moving average at 1.2890/95
Further upside would find interim resistance at 1.3000, ahead of 1.3050 (March 25th high). If the impulse continues, then the area of 1.3075 (38.2% Fibonacci retracement of the July 2012-February 2013 upside) would be the next hurdle, followed by 1.3107 (March 15th high).
Support levels align at 1.2890/95, where sits the 200-day moving average, reinforced by December lows around 1.2880/85. A dip beyond that would expose the region of 1.2660/80, where converge the 61.8% retracement and November lows.