Trends won’t be altered with a 200,000+ US payroll result

August 4, 2017 8:47AM CDT

Dollar: The trend in the dollar is firmly entrenched in the downward motion to such a degree that a lack of definitive downside extension over a couple days has discouraged some sellers.  However, news of fresh subpoenas in the Russian/Trump affair provides the bear camp with ongoing ammunition for their case.  On the other hand given the oversold condition of the dollar in the wake of consistent declines since July 5, traders should expect some measure of short covering bounce today.  In fact, the patter in the dollar has been to respond favorably to goo data but it then fails to sustain that reaction.  In our opinion, to throw off the downtrend in the dollar is extremely difficult due to the overhang of political baggage and therefore a trend changing result today might have to present a reading equal to last month's 222,000 US payroll again.  Resistance comes in at 93.05.

Sep '17 Dollar Index Daily Chart

Sep '17 Dollar Index Daily Chart

 

Euro: While some might have seen the overnight European scheduled data as somewhat mixed German industrial orders were better than expectations even though they were softer than the prior month.  However, the Italian retail sales results on a month over month and year over year basis came in very strong and that combined with presentation of fresh developments in the Russia/Trump affair should leave the euro well bid.  As suggested in the dollar coverage this morning it will take a noted positive US nonfarm payroll result to knock the euro out of its uptrend pattern.  Traders should expect a measure of volatility today but a general support level in the September euro is seen at 1.1840.

Sep '17 Euro Index Daily Chart

Sep '17 Euro Index Daily Chart

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