FX.co ★ USD may significantly change on Friday. Drop is also possible

Today, investors are in a good mood since the negotiations over the US debt ceiling may progress. The easing of geopolitical tensions also supports the market. The US and China are likely to continue the talks. What is more, a meeting of the leaders of the two countries is due to take place at the end of the year. Investors are waiting for the heads of the world's largest economies to discuss the situation around Taiwan, tackle the Evergrande debt problems as well as regulatory restrictions and energy deficit.

Although the US dollar has slowed down a bit, it is still strong and has potential to rise amid expectations of the non-farm employment report. Market participants foresee strong data. If the predictions come true, the Fed is likely to launch the tapering of the QE program as early as possible.

Judging by yesterday's ADP report, the non-farm employment figures could be really strong. At the same time, during the last three weeks, the number of unemployment claims has jumped to 2.80 billion from 2.78 billion. It means that the number of unemployed people rose. This may have a negative impact on Friday's report and the US dollar. In fact, it is really difficult to predict the outcome.

Today's weekly data on the US labor market was quite positive. The ADP report also caused a favourable reaction. Market participants have to take into account weekly data, including the ADP report.

In fact, if Friday's report unveils poor figures, it will hardly affect the market sentiment. Last week, the non-farm employment data was really disappointing, but the US dollar managed to stay afloat. It may just inch down, but the main trend will hardly change. Most experts suppose that the greenback will continue gaining in value until the next Fed's meeting scheduled on November 3.

If the non-farm employment data turns out to be encouraging, traders of the greenback will get a new reason to continue buying the asset.

If bulls become more active, the US dollar index may once again test the recent high near 94.50. The next resistance level is located at 95.00. The index may reach it in the near future.

At the moment, a further rise in the US dollar growth is just a prediction. The Fed is still printing money, whereas other central banks are raising the key interest rate. This week, the Reserve Bank of New Zealand has tightened its monetary policy. In the best-case scenario, the Fed will raise the benchmark rate at the end of the next year.

The US dollar depends not only on the Fed, labor market reports, and fundamental factors, but also on the sentiment of big players. Once they start selling off USD, its position will change.

Nevertheless, a further rise in the greenback will lead to a drop in the euro. The single currency will hardly recover soon. If the euro accelerates its correctional movement from the low of 1.1529, the next target will be located at 1.1575-1.1585. Bulls are unlikely to push the price higher especially ahead of the publication of the US labor market report.

In fact, it is highly possible that the euro will slide to its yearly low of 1.1529. The level of 1.1500 will act as strong support.