It’s been a big session for the Greenback, highlighted by gains across the majors. Receding political uncertainty is the key driver of today’s bullish dollar, but improved jobs numbers are aiding the rally. With only a few hours to go in the forex session, the EUR/USD, USD/JPY, USD/CHF, and GBP/USD are all trending in favor of the USD.

On the traditional economic news front, this morning has been all about the U.S. labor market. Here are the key reports put out during the pre-market:

Event                                                       Actual                     Projected            Previous

Initial Jobless Claims (Jan. 2)                787,000                     815,000              790,000

Continuing Jobless Claims (Dec. 26)     5.07M                          NA                     5.20M

Over the past six months, it’s been a rare occasion when both Initial and Continuing Jobless Claims have fallen from previous levels. However, this occurred today and suggests that U.S. labour may be ready for a Q1 2020 rebound.

In addition to improving jobs numbers, the ISM Services PMI (Dec.) came in at 57.2, well above expectations (54.5) and the previous release (55.9). This is an extremely positive metric and points to the beginning of a 2021 COVID-19 services industry recovery.

Let’s take a look at the midweek pullback in the EUR/USD and see where this market may be headed.

EUR/USD Pulls Back, Tests Daily SMA

In a Live Market Update from Wednesday, I outlined a long trade setup in the EUR/USD. Trading is a game of inches ― depending upon your broker, you may or may not have got in on the quick 20 pip profit. If not, don’t worry; there are sure to be an abundance of opportunities throughout January.

Here are the key levels worth watching in this market:

• Resistance(1): Spike High, 1.2349
• Support(1): Daily SMA, 1.2243
• Support(2): Bollinger MP, 1.2197

Overview: As we head toward the weekend break, a bullish bias is warranted for the EUR/USD. At press time (1:35 PM EST), rates are currently above daily support and looking to close north of 1.2275. With U.S. Non-Farm Payrolls (Dec.) scheduled for tomorrow, this pair is capable of extending early-2021 gains significantly on a weaker-than-expected report.