Euro remains in red ahead of key US NFP data

The Euro stands at the back foot in early Friday’s trading following Thursday’s 0.70% drop (the biggest one-day fall since Apr 30) as upbeat us private sector jobs data, further drop in jobless claims and strong PMI figures that point to accelerating recovery in the US services sector, added to optimism about the US economic recovery and hopes for earlier than expected Fed’s action in tightening policy.
European session trading is quiet as markets await key event today – release of US non-farm payrolls for May.
Daily studies weakened after Thursday’s drop and close below pivotal supports at 1.2139/33 (30DMA / Fibo 23.6% of 1.1704/1.2266 rally) which warns of deeper pullback.
Moving averages (10/20/30) turned to bearish setup and momentum broke into negative territory, warning of deeper correction, with initial signal seen on break of 1.2100 zone (former important Fibo barrier, now reverted to support, where today’s action found temporary footstep).
US non-farm payrolls are forecasted to rise 650K in May after disappointing 266K increase previous month, while unemployment rate is expected to drop to 5.9% in May from 6.1% in April.
US payrolls data in line or above expectations would further boost positive sentiment and lift the dollar that may risk Euro’s bearish acceleration through key supports at 1.2051/00 and confirmation of reversal.
Another possible scenario on strong NFP numbers could be ‘buy the rumor – sell the fact’ as dollar’s larger downtrend remains intact and  traders may grab an opportunity for re-selling the greenback at better levels.
Conversely, disappointing NFP figures would likely cause stronger reaction in the market compared to positive outcome, but the action will strongly depend on the grade of NFP’s divergence from consensus.

Res: 1.2139; 1.2172; 1.2193; 1.2214
Sup: 1.2102; 1.2051; 1.2039; 1.2000