Traders lightened dollar positions before tomorrow’s employment report. A big disappointment in the US payroll number might shift expectations about likely Fed action through the remainder of 2015 and prompt more dollar weakness. Except for employment, virtually all US data has disappointed during the past month, including manufacturing, orders, retail sales and personal consumption. If the payroll print comes out on the wrong side of expectations, expect EUR/USD to break through 1.10, as it did momentarily March 27.

Rising bond yields in Europe also have some impetus to EUR/USD. The German 10-year yield rose 2.7 bps today and Italy rose 3.2 bps in response to better-than-expected economic data.

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