The drivers of USD popularity were positive sentiment regarding new tax reforms from Trump, and better than expected American data. ADP report showed the largest private payroll growth in 5 months, adding 237K vs. 185K forecasted.
Q2 GDP was also revised higher more than expected to 3% from 2.6%. And that was enough to make the market to believe in USD again.
However, we need to be cautious in the current environment, as tax reform optimism may disappear in a minute, and labor data on Friday may show a sad picture. After ADP report the sentiment about Non-Farms is overheated, and if it’s not confirmed by the real data, the selloff may be huge.
Besides, take in mind that market expects the ECB to announce tapering during its meeting next week. And it’s the argument in favor of EUR appreciation.
Given the above mentioned, the current levels look very attractive for buying EURUSD with the next target at 1.1960 followed by 1.20.