USD strength to continue. At least till NFP

Buying the greenback on pullbacks have proven to be successful strategy over the past few days. This trend is likely to continue at least until we get new labor market data. USD index quite nicely held the trendline, did not break yesterday's low and bounced back rather significantly. As of now, the dollar index is looking pretty good and I am still waiting for the much anticipated test of the downward sloping trendline which is currently around the 77.65 area.

Gold chart looks promising to the downside further reassuring my USD bullish bias. Recent recovery proved to be short lived, price bounced off the downward sloping trendline and today the price of the yellow metal broke back below 1000 level. I'm still targeting 960 - 970 area within the next few days.

EURUSD continues to drift lower with 10, 20 and 30h emas all stacked in correct order pointing to additional EUR weakness. EURGBP looks pretty weak as well - I predict that EURGBP will sell down pushing euro lower against the buck with it. Recent concerns that EU commissioner expressed regarding the strength of the Euro certainly helped. I also want to point out nice bearish reversal on the AUDUSD daily. Bearish engulfing pattern that broke below 10 day ema points to furhter AUD weakness.

Tomorrow's NFP release may alter the currency outlook. But given that the equity markets sold off very aggressively today (Dow -2.1% and S&P -2.58%) the risk aversion trades seem to be back. If NFP and maybe more importantly the unemployment rate bring surprisingly negative data, the skepticism regarding US recovery may increase bringing equity markets down, the dollar up and commodities down.