Daily Report: Dollar Stays in Range ahead of Non-Farm Payrolls

Dollar continues to stay in the middle of recent range ahead of the highly anticipated job report from US. Markets expect the Non-farm payroll report to show another -40k contraction in the job market in February while unemployment rate is expected to rise back to 9.8%. Outlook for manufacturing jobs continued to improve with employment component component of ISM manufacturing index stayed above 50 for the third consecutive month in February and rose to 56.1. However, job in services might drag down the overall picture as employment component of ISM non-manufacturing index stayed below 50 even though rising to 48.6. ADP private job report also showed -20k contraction in February. One more thing to note is the sharp deterioration of consumer confidence in FEbruary to 46, which breaks last July's low of 47.4. We might see the unemployment rate climbs up again in the coming months.

Technically, yesterday's strong rebound in dollar index and break of 80.55 minor resistance argues that consolidation from 81.34 might have finished at 79.81 already. We'd favor more upside today for a retest of 81.34 resistance and break there will confirm rally resumption towards 82.63 resistance next week. On the downside, even in case of another fall, we'd continue to expect strong support from 79.56 cluster support holds (38.2% retracement of 76.60 to 81.34 at 79.52) to conclude the consolidation and bring rally resumption eventually.

Elsewhere, the Japanese yen is soft on speculation that BoJ might discuss more monetary easing measures in the coming meeting on March 15, which aims at lowering short term interest rates. Yen is also pressured by broad based rally in Asian stocks which saw Nikkei up 1.93%. Crude oil is still struggling around 80 level. Gold is trading around 1130. Other data to be released today include UK PPI and German factory orders.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.3614; (P) 1.3674; (R1) 1.3757; More.

EUR/USD's break of 1.3591 minor support argues that recent consolidation might be completed at 1.3735 already. Intraday bias is flipped back to the downside for 1.3435 first. Break will confirm decline resumption and should target 161.8% projection of 1.5143 to 1.4217 from 1.4578 at 1.3076 next. On the upside, above 1.3735 will delay the bearish view and bring more consolidations. But after all, upside in expected to be limited by 1.3838/52 resistance zone and bring fall resumption.

In the bigger picture, three wave rise from 1.2329 is treated as consolidation to fall from 1.6039 only and should have completed at 1.5143 already. Fall from 1.5143 is tentatively treated as resumption of the whole down trend form 1.6039 and should target a new low below 1.2329. Break of 1.4217 support turned resistance is needed to invalidate this bearish view. Otherwise, we'd expect fall 1.5143 to continue even in case of strong rebound.

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