FX.co ★ EUR/USD. Trapped in the price range. All attention is on Nonfarm

Another upward blitzkrieg of EUR/USD bulls failed again. The fundamental background on Wednesday contributed to the development of a corrective price growth: the dollar's position suddenly weakened amid the strengthening of the euro. Record inflation growth in the eurozone, a 49-year inflation high in Germany, hawkish rumors around the European Central Bank – all these fundamental factors pushed the euro up throughout the market. The dollar, in turn, was annoyed by the disappointing ADP report, which was published two days before the release of the August Nonfarm. As a result, the EUR/USD pair jumped to 1.0080 on Wednesday, and began to slow down in the second half of the day. Bulls once again failed to hold their positions, even despite the fundamental background favorable for the euro.

However, EUR/USD bears also cannot boast of great success. Yes, on the one hand, they pulled the price below the parity level again. But for the development of the downward trend, they need not only to overcome the support level of 0.9950 (the lower line of the Bollinger Bands indicator on the four-hour chart), but also to decline to the base of the 99th figure in order to test the main price barrier of 0.9900 (the lower line of the Bollinger Bands on the weekly chart). To date, the bears have not even completed the "minimum program". The price has been fluctuating in the range of 0.9950-1.0050 for the second week. Both bears and bulls of the pair periodically try to escape from this trap, but each time they come back. Actually, the events of Wednesday-Thursday serve as an additional confirmation of this.

EUR/USD traders really found themselves in a kind of trap. Despite the overall dominance of the greenback, bears can only easily overcome the previously "indestructible" level of parity. But market participants are not risking storming the key support level of 0.9900 yet. All attempts to gain a foothold below the 0.9950 mark are impulsive. The euro, in turn, is too vulnerable to play the role of the first violin, even in the context of the development of a large-scale correction (we are not talking about a trend reversal at all).

Therefore, the only chance for bulls of the pair (as well as bears) to break through the above range is a weakening/strengthening of the US currency. The devaluation of the greenback will help the EUR/USD bulls to "visit" the area of 1.0050-1.0070 again, while the strengthening of the dollar may lead the bears to the area of the 98th figure.

Given the prevailing fundamental picture, special attention should be paid to the August Nonfarm, which will be published on September 2. If they surprise again with a "green color", as a month ago, the dollar will receive significant support, especially amid a disappointing report from the ADP agency.

Let me remind you that the previous – July – Nonfarm pleasantly surprised dollar bulls. In particular, the unemployment rate in the United States fell to 3.5%. Another "title" component of the release was also surprising. The number of people employed in the non-agricultural sector jumped by 528,000 in July. Despite the fact that experts expected to see this indicator at the 250,000 mark. Moreover, the June data were revised upwards: according to final estimates, almost 400,000 jobs were created in America instead of the previously announced 372,000. In July, 470,000 new jobs were created in the private sector of the economy, while the forecast was at the level of 270,000.

According to general forecasts, the growth rate of the number of employed should grow by 295,000 in August. The unemployment rate is likely to remain at the same level (3.5%). The growth rate of the average hourly wage on an annualized basis may accelerate to 5.3%.

In my opinion, the dollar will receive support even if all the components of the release come out at the forecast level (not to mention the "green color" of the report). Traders were alerted by the latest report from the ADP agency, which turned out to be a blatant failure. According to the agency, the number of people employed in the non-agricultural sector of the United States in August increased by only 132,000 (despite the fact that the preliminary forecast was at the level of 300,000). If the official figures repeat the trajectory of this release, the dollar will again be under significant pressure.

But here it is necessary to take into account that the figures from ADP do not always correlate with Non-Farm, so "betting" against the dollar is very risky. After all, if Friday's data exceeds expectations, dollar bulls will be inspired for another rally.

Given the high degree of uncertainty, before the release of key data on the growth of the US labor market, it is best to take a wait-and-see attitude. Strong Non-farms will increase the probability of a 75-point increase in the interest rate at the September meeting, and, accordingly, will strengthen the greenback throughout the market. While a disappointing report will allow EUR/USD bulls to go back to correction, in the area of 1.0050-1.0070.