The story repeated on Thursday, the shared-currency rallied during the European session only to surrender gains as soon as American investors join the market. EUR/USD peaked at 1.2982 after encouraging data on the U.S. labor market lifted risk appetite, but failed to consolidate and then pulled back amid news that a Greek court ruled that pension reforms requested by the troika in order for Greece to secure more bailout cash may be unconstitutional.
Ahead of the U.S. nonfarm payrolls report, ADP reported the private sector added 158,000 jobs in October, adding to the positive mood. The ISM manufacturing PMI and a gauge of consumer confidence also came in above expectations.
Euro remains rangebound, NFP eyed
The rally of the euro against the dollar stalled at the 1.2980 zone as despite the positive tone, the common-currency is having a hard time finding buyers to support a strong break of the 1.3000 psychological hurdle. EUR/USD was last down 0.1% at the 1.2940 zone.
On a wider view, the EUR/USD remains inside a broader 1.2800/1.3170 range where it has traded since mid-September. In the absence of shocking news out from Europe, the pair will likely remain inside its weekly range especially ahead of the US presidential elections.
The U.S. employment report will be published on Friday but it will likely have a limited effect on the EUR/USD unless it comes in too far from consensus. In the aftermath of the report, based on recent data and FX price action, the Wells Fargo team anticipates weakness in the U.S. dollar and yen, and strength in most other foreign currencies, in the near-term.
According to the TD Securities team, the EUR/USD looks like more of a range trade on the very short term charts and could see a test of recent support. "Intraday, the overnight low near 1.2930 is the closest level on the downside to watch, while 1.3000 is the key topside level", they say. Meanwhile,Valeria Bednarik, chief analyst at FXstreet.com notes that "only above 1.3020 the pair may attempt a run higher, looking then for the 1.3070 area, while the downside remains well limited by strong buying interest around 1.2880".