European currencies and gold embarked on a modest upside technical pullback as discussed yesterday:

In the EURUSD pair, there was a false breakdown of the horizontal support at 1.07 during the last hours of the Asian session. However, cautious buying interest emerged at the beginning of the European session, although it faded near 1.0750. 

A similar technical picture can be observed for gold, with a false breakdown of the lower bound of the trend channel followed by a rapid rise to $1960. However, the temptation to take profits started to wane as market participants anticipate the US unemployment report on Friday.

There is currently a catastrophic lack of upside catalysts for dollar peers. The focus remains on America, as the futures market indicates that the June interest rate hike by the Federal Reserve is not fully priced in yet (estimated probability: 63-66%). The reassessment of expectations regarding Fed policy remains a powerful potential driver of market changes, which could easily trigger margin calls on USD short positions or longs on dollar peers due to the potential upside sweeping move in USD after NFP. Today's dynamics suggest that it is not more than just a technical rebound. 

Sentiment indexes in the Eurozone are weak, while the US received another surprise from the Conference Board regarding consumer data. The confidence index exceeded 102 points (forecast: 99), and the previous reading was revised upward. One-year inflation expectations rose to 6.1%. In short, US data keeps investors on their toes, and playing against the dollar at the moment is like playing with fire, at least until the Non-Farm Payrolls report.