Going into the payrolls report, the US dollar rallied, but pre-release gains were not extended despite the stronger than expected headline number.  Payrolls increased 211k vs. 190k expected in the month of March.  Jobs created in the month of Feb were also downwardly revised from 243k to 225k, tempering optimism.   Even though the unemployment rate improved to 4.7 percent, the internals of the report offered a mixed picture.  Manufacturing sector, the sore point of the US economy continued to see contraction with 5,000 jobs lost last month and the Feb figure was downwardly revised from -1k to -10k.  Additionally, wage gains were modest at best with average hourly earnings growth slowing from an upwardly revised 0.4 percent to 0.2 percent in March.  Average weekly hours remained unchanged at 33.8.

Overall, the report gives neither bulls nor bears a clear advantage.  The dollar really needed a resoundingly strong report to reverse its recent weakness.  At this point, the market is likely to consolidate and look to next week's trade balance and retail sales data to determine the direction of the pair for the near term.  The US economy hinges on strong consumer spending and if it fails to deliver, the Euro could head right back to its year to date highs.

Kathy Lien is the Chief Currency Strategist at FXCM.