Europe Morning Forex Update

The US dollar traded flat in Asia this morning after being sidelined yesterday by the BoE's surprise rate hike.
EURUSD has traded in a 1.2787 to 1.2811 range this morning, while USDJPY has traded between 114.90 and 115.27.
Fed expectations have not moved much in recent days, with the curve still pricing less than 40% odds of a hike next week but USD shorts may be growing increasingly wary of today's jobs report - with not much tightening priced in now, USD upside reaction to a strong report could be disproportionate to USD weakness on a consensus or weaker result.

Look ahead for non-farm payrolls due at 1230 GMT and the market expects a 142k increase.

EURUSD has stalled thus far at 1.2837, Aug 2 high where a break is required to expose key resistance at 1.2865 resistance, July 7 high. This level remains our key pivot point with our preferred bias calling for Euro weakness while 1.2865 resistance remains intact. On the downside, initial support is located at 1.2720, the Aug 1 low.

USDCHF Has found support at 1.2253, Aug 2 low where a break is required to trigger a fresh round of weakness and expose 1.2185, the July 7 low which also marks key support. A break of 1.2185 is required to expose the USD to even deeper losses. Initial resistance lies at 1.2368, Tuesday's high.

GBPUSD Outlook remains constructive with the sequence of higher highs and higher lows intact. The focus is on 1.8881, the June 5 high following yesterday's break higher. Yesterday's low of 1.8697 offers initial support.

USDJPY Remains vulnerable having failed to sustain the break of Jun 27's 116.72 peak recently. The violation of Jul 21's 115.82 base and former resistance from Jul 5 at 115.80 continues to weigh with the focus now on 113.45, July 10 low. The immediate outlook is heavy below 115.82, July 21 low with initial resistance at 115.39, the Aug 1 high.