EUR/USD around 1.3670 Before U.S. Jobs Data Later

The U.S. dollar traded 0.2 percent from an eight-month low versus the euro as investors look to employment data due today to help assess the timing for a reduction in Federal Reserve stimulus.

The greenback was poised for a monthly slide against most of its 16 major counterparts ahead of a report that may show the U.S. jobless rate remained above the central bank’s threshold to start scaling back asset purchases. The yen held losses from yesterday versus its peers as demand for safety waned before figures this week that may show consumer-price gains in Japan held near the fastest pace since 2008.

“The Fed tapering this year seems to be off the table,” said Noriaki Murao, the New York-based managing director of the marketing group at Bank of Tokyo-Mitsubishi UFJ Ltd. “A payrolls number that is slightly stronger than expectations may not spur too much dollar buying. The risk is that we would see a bigger negative reaction should the payrolls disappoint.”

EUR/USD: Consolidating below 1.37

Backed off from test of the 1.3700 level though overall tone still firm and further extension to target the 1.3711 high not  ruled out despite overbought readings on intraday tools. Support is at 1.3646  then the 1.3616/00 area. Above 1.3711,   but difficult for now, will see further extension within the 3-mth rising channel.

EUR/USD - Surging higher towards its key resistance at 1.3711

Monitor the test of the key resistance at 1.3711. The medium-term bullish momentum does not show any sign of weakness yet. However, the increasing overbought conditions and the key resistance area given by the long-term declining trendline (around 1.3976) and the psychological threshold at 1.4000 should put a cap to the medium-term upside potential.

Growth Uncertainties could Force the Fed

The can-kicking funding deal means growth uncertainties could force the Fed to refrain from tapering until next year. Pimco's Bill Gross wrote via the company's official Twitter account Thursday that the next debt-ceiling battle set for February, 2014 argues for "no quick taper" and steady yields. "Be fully invested in bonds and stocks," he writes. Hopes of Fed QE sticking around for longer fired up both stocks and Treasurys today. S&P hit an intraday record high while the 10-year yield dropped below 2.6%     

EUR/USD update: not giving back much of the gain

EUR/USD has not been able to do much with the extreme o/b setup on the day. Mkt seems comfortable staying very close to the     session high and not giving back much of the gain despite an extreme o/b condition heading into Fri. If the mkt does see a bigger reaction to this setup, the dip support stands  at 1.3607. Bulls likely trying to stay on board for 1.3711. R.Z