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NFP to fuel stocks & USD to the upside; EUR/USD at 1.2370, even at 1.2043

FXStreet (San Francisco) - Experts are watching closely October NFP data on Friday as much of the data published this month has been very positive including the Chicago PMI on Friday and Monday's ISM.

Busy Week in the investment markets as central banks in the UK and the euro area will hold monetary meetings. In addition, the week ends with the famous non-farm payrolls in the US employment report.

After the actions of the Fed and the Bank of Japan last week, the ECB is under pressure to act; However, the market believes that the ECB will not act until December. Thus, the focus will be on the employment report in the US this Friday.

NFP is expected to report 231K new payrolls in October; However, the data of the last month have shown strong numbers that have led some experts to move their forecasts upward.

Let us recapitulate: Jobless claims have fallen to multi-year lows, while the Chicago PMI rose Friday to its highest level since October 2013. This week, ISM manufacturing index recovered previous month's decline and returned to 59.00, the August number and its highest figure since 2011. In addition, it is expected that the ADP employment report follow through with this trend.

Thus, fundamental data in the United States are showing strong numbers that will drive the dollar along with Wall Street higher. In a recent report, FXStreet chief analyst Valeria Bednarik commented that "a reading above 250K with no downward revisions to previous numbers and a steady or better unemployment rate, should only boost dollar rally across the board."

In this case, the EUR/USD should have no problems to successfully break below the 1.2500 area and extend fall to 1.2370. Scotiabank adds fuel to the fire and considers the Euro's weakness: "Trading below 1.25 to a two‐year low; with the next major support level the 2012 low of 1.2043."

On the other hand, as Bednarik points, "if the number disappoints but stands anyway around 200K, dollar may ease short term, but market will rather see it as a buying opportunity than the beginning of a bearish run."

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