EUR/USD: drop in short-term ahead of NFP report, and pursuit of drop in medium-term ahead of European policies (Barclays bank)

Barclays reviews the short-term outlook for the EUR/USD, reflecting the dollar's asymmetric risks in relation to the NFP report which will take center stage this week:

"A figure close to our expectations at 175k for Friday's NFPs, or even a little less will keep the Fed on track, to the extent that a deceleration in employment gains is normal in the current context of near full employment.

On the other hand, numbers above expectations (closer to 200k) would signal that the momentum remains strong, which could prompt the Fed to act faster than expected, accelerating the USD increase.

In Europe, the next high-risk event will concern the Sunday referendum in Italy, for which a "no" seems to be largely taken into account in the the EUR/USD prices in our opinion, but other risks are expected soon, due to the elections in France, Germany and the Netherlands.

In this context, we believe that it is unlikely that the EUR/USD will continue with a sustained increase.