It is a major fiesta in markets today dear reader, where jitters are high and investors are on the edge of their seats awaiting the release of first-class fundamentals; we are only hours away from the rate decision by the ECB and then on to the U.S jobs jamboree and volatility is at its utmost.

With the ongoing mixed signals in markets, the dollar is gaining grounds across the boards, where the dollar index that gauges its moves against six major currencies, managed to rise to as high as near the 80 levels from yesterday’s closing levels in NY at 97.76.  

Investors are anxious for a number of reasons, powering by that the dollar for further gains, as the start was with comments from China dismissing roomers over the G8 discussing alternatives for the dollar as a reserve currency. Adding to that with the jobs report on the queue the sentiment is growing grim after the ADP was worse than expected, though the projections for the nonfarm today is for June to have saw slightly more jobs than May, yet I still think when the figures are out they will not be as abysmal as expected as the layoff pace indeed has slowed and it is the bottoming grounds that we can only see at this time, as the time for hiring is still far in sight. All that added to the negativity in markets as equities in Europe declined and risk aversion increase.

Sterling managed to decline further over intraday day basis, where it found strong support near 1.6320s forcing the pair to rise back to the upside to correct some momentum as over intraday basis the pair is reaching oversold areas; the negativity has eased with the strong support, though fears from the US jobs report to increase pessimism might take the pair to attempt the mentioned levels and a successful breach will extend the downside wave over the short-term.

With unemployment in the euro area rising to a decade high above expectations to 9.5% and the unwinding of fears over the diversification of dollar reserves after the Chinese comments powered the dollar to gain back its grounds after weakening yesterday to its lowest in nearly three-weeks.

The pair has been moving steadily to the downside in correction which seemingly is nearing its end according to intraday indications, where the pair can find strong support at 1.4070 which if the downside move extends will head no further than 1.4057 for today. The pair is expected now to move to the upside after setting the former mentioned support level towards 1.41 levels, though with the seen heightened volatility our expectations might fail shall Trichet have a very downbeat rhetoric over the outlook and the nonfarm payrolls increase risk aversion, though our bets favor the mentioned upside intraday move in the coming session.

The dollar versus the Japanese yen has been moving in tight ranges though the dollar did enjoy the upper hand, where risk aversion and falling equities and commodities across the board ahead of the rate decision and the jobs report helped the yen offset some of the dollar’s strength.

Intraday momentum and direction indicators are tilting towards neutral grounds while the upside move though is seen will only be assured when the pair is successfully trading above 96.70-90 areas to accelerate the upside above 97 levels and if that is not seen the sideways with some downside bias is rather to be seen.