Euro defying gravity

The greenback has been thrown around lately and the trend continued overnight with the private payrolls release in focus.

Source: Bloomberg

The ADP non-farm payrolls reading showed 169,000 jobs added when the market was expecting around 199,000. This impacted expectations heading into Friday’s official reading which is expected to show 227,000 jobs added. With expectations being quite high, there is plenty of room for disappointment. A minor positive was the improvement in labour costs which implies wages are headed in the right direction. Meanwhile, the euro managed to extend gains after the IMF said Greece made an interest payment and Greece reinforced an agreement on emergency aid can be reached. This saw EUR/USD being one of the best performers as the pair nudged through 1.1300 almost effortlessly. Given there is still plenty to play out in the macro space this week, I wouldn’t rule out further volatility. Traders with emotional shorts around the euro will be getting nervous but it’s important to note the pair has now entered a fairly significant congestion zone. The region between 1.1350 and 1.1500 might present significant resistance and I doubt traders will have enough conviction to take it through that barrier. I would consider shorts on any moves to 1.1500 which is where a downtrend that’s been in place since June last year kicks in.

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