Dealers seem reluctant to push EUR/USD to the downside too aggressively ahead of US employment figures later this morning but I suspect we could see a push to the downside once the even risk is out of the way. 1.2740 stops and 1.2700 barrier triggers will be quite attractive to market makers as sentiment toward the euro continues to erode.
German industrial production, the engine of Europe growth is collapsing. contagion from Eastern Europe is a drag and concerns remain that European banks have yet to ‘fess up to the true extent of their exposure to toxic assets. Any move to the downside may be short-lived and followed by a violent rebound on fears of ECB support, but I suspect that will be the outcome barring some miracle US employment report.
If the US loses substantially few jobs than expected, EUR/USD will see a topside pop on falling risk aversion. Otherwise, th above scenario is favored. EUR/USD balances at 1.2800.
