EUR/USD made new 4-month lows yesterday, as ECB head Draghi confirmed that policymakers discussed the idea of lower interest rates. Meanwhile, the US printed a strong ISM non-manufacturing PMI reading, which extended the Greenback’s rally.

Today’s release of the non-farm payrolls report could trigger another sharp selloff for this pair, as analysts are expecting to see a rise from 162K in July to 178K in August. A strong figure could confirm the possibility of the Fed’s Septaper, which would be very dollar positive.

A retracement play could be in the works if the pair starts pulling up to the 1.3150-60 levels, which have acted as support in the past. Shorting at this area with a stop above 1.3200 and a target of 1.3000 would yield at least 2:1.

A breakdown could also be possible if the pair simply keeps consolidating for the rest of today’s sessions before the NFP release.

By Kate Curtis from Trader’s Way