Trading the Dollar Ahead of the Jobs Report

Victor J. Blue | Bloomberg | Getty Images

Job seeker Julia Gilgurd, center, waits in line to enter a Choice Career Fair in New York, U.S., on Wednesday, July 18, 2012.

The dollar index is moving higher ahead of Friday's nonfarm payroll report, and the question for traders is whether the move will continue.

Todd Gordon, for one, is planning to hold on.

"I think we're in a risk off environment here," said Gordon, co-head of research and trading at Aspen Trading. He is projecting that worries about the "fiscal cliff" will boost demand for the safe-haven dollar, as will a downbeat economic forecast from the European Central Bank. "I'd like to take the long side of the dollar heading into the NFP," as he tags the nonfarm payroll report.

For the other side of the trade, Gordon told CNBC's Scott Wapner he is eyeing the Australian dollar. He points out that the central band has cut interest rates sharply this year, to the tune of 175 basis points, and "technically speaking, Australia is really kind of begging to be sold." He said the currency is in a long-term consolidation pattern.

"FX traders like me are dying to sell this kind of long-term consolidation up around this 1.05 level."

Gordon wants to sell the Australian dollar against the U.S. dollar at 1.0525, setting a stop at 1.0625. As for a target, "don't be greedy," he said. "At about 1.0300 we can ring the cash register."

Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30 p.m. EST and repeats on Saturdays at 7 p.m. EST

Learn more: The essential vocabulary for currency trading is on Key Terms Dictionary. Top currency strategies are broken down for you in Currency Class.

Talk back: Tell us what you want to hear about - email us at [e-mail].