USD: As the Fed look set to speed up QE tapering at the upcoming meeting with Fed Officials echoing Chair Powell’s comments, today’s NFP may not necessarily move the needle for near term policy action. But instead, reinforce the consensus view of the committee to go ahead with a faster taper. In turn, I would expect a more muted reaction for the USD, unless the data shows a notable deviation from expectations. Elsewhere, concerns over Omicron continue to hold investors back from piling back into risk assets and will likely remain the case until scientific data over vaccine efficacy is released, which can be expected in the next week or two. Therefore, market sensitivity to omicron headlines will remain. Taking a look at the chart, USD downside has been curbed by the short-term moving average (20D) and thus a close below 95.75 and 95.50 would be a concern for USD bulls. However, in light of a hawkish Fed, I see the USD remaining supported with another push towards 95.65.

US Dollar Chart: Daily Time Frame

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Image Source: Refinitiv

Faster Taper Could Mean Tapering Is Wrapped Up By April

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Image Source: DailyFX

EUR/GBP: For those looking to fade GBP weakness, a more appropriate avenue would be via EUR/GBP. While the ECB remains of the view that inflation is largely temporary, the Bank of England has shown a greater sense of urgency to remove crisis measures. As it stands, money markets are 50% priced in for a December rate rise of 15bps, which is likely to increase in the run up to the meeting, particularly if the jobs market remains tight, in the October data. That said, I would be looking for pullbacks on rallies into the 200DMA (0.8561).

EUR/GBP Chart: Daily Time Frame

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Image Source: Refinitiv