EUR/USD drops further towards 1.1940 ahead of US payrolls

• Bears continue to guard the 1.2000 barrier ahead of Eurozone data.
• King dollar to regain momentum on higher US wages?

The EUR/USD pair is seen fluctuating between gains and losses in a 15-pips narrow range below the 1.20 handle, as we progress towards the European opening bells.

US dollar in a consolidative mode ahead of US NFP

The lack-lustre trading seen in the spot is mainly driven by a broadly subdued US dollar, as markets remain in a wait-and-see mode and refrain from placing any directional bets on the greenback heading into the crucial US labor market report due later at 1230 GMT.

All eyes will remain on the US wage growth data, as the Fed now sees inflation moving closer towards its 2% price target. Hence, upbeat wages could boost the case for four Fed rate hike this year as against 3 rate hikes projected by the Fed’s dot chart.

On an upbeat US jobs report, we could see a revival in the greenback’s recent rally, which could knock-off the EUR/USD pair towards the four-month lows of 1.1938. Should the data disappoint, the rates could see a bounce towards the 200-DMA at 1.2048. However, the bounce may remain short-lived, as monetary policy divergence will continue to undermine the EUR.

EUR/USD levels to watch

Jim Langlands at FX Charts writes: “Look for bids at 1.1935 to continue to prop it up in the near term but below which could see a move to the next Fibo level at 1.1910 and even to long-term rising trend support, currently at 1.1890. A break of that support would open the way to 1.1800/1.1785 and a strong US jobs data tomorrow could see a run towards those levels. On the topside, minor resistance will be seen at 1.1975 and 1.2000 ahead of the 200 DMA at 1.2010. The session high was 1.2030, which seems unlikely to be revisited but if wrong, look for a squeeze back to 1.2065.”