EUR/USD appears supported near 1.1100 ahead of US ISM
|- EUR/USD fades the spike to 1.1190 on USD-recovery.
- US ADP report surprised at 183K in February (from 209K).
- US ISM Non-Manufacturing, Fed’s Beige Book coming up next.
The selling mood around the shared currency remains well and sound in the middle of the week, with EUR/USD finding decent contention in the 1.1100 neighbourhood for the time being.
EUR/USD now looks to US data
EUR/USD remains under the sellers’ control on Wednesday, coming under some downside pressure after hitting fresh weekly highs beyond 1.1200 the figure in the wake of the Fed’s rate cut on Tuesday.
It is worth recalling that the Federal Reserve reduced the FFTR by 50 bps on Tuesday in order to combat the potential impact of the COVID-19 on the US economy. The Fed’s move hurt the buck and drove yields to historic lows, although they are both regaining some traction on Wednesday.
In the docket, EMU and German final Services PMI came in below the preliminary readings for the month of February, while Retail Sales in the broader Euroland expanded 0.6% in January from a month earlier, reversing at the same time the previous 1.1% contraction.
In the US, the ADP report surprised to the upside once again. Indeed, the report showed that the US private sector added 183K jobs during last months vs. 170K forecasted and down from January’s 209k (revised from 291K). later in the NA session, market will publish its final Services gauge ahead of the ISM Non-Manufacturing and the Fed’s Beige Book.
What to look for around EUR
EUR/USD came under pressure following weekly/monthly tops beyond the 1.1200 mark. In the meantime, the ECB remains vigilant and ready to act in case the outlook deteriorates further on the back of the coronavirus and particularly after the Fed cut rates on Tuesday. On another front, the ECB is expected to finish its “strategic review” (announced at its January meeting) by year-end, leaving speculations of any change in the monetary policy before that time pretty flat. Further out, recent better-than-expected results in both Germany and the broader Euroland appear to have re-ignited some optimism among investors regarding the possibility of some recovery in the region and the currency. This view is also supported by rumours of fiscal stimulus in Germany.
EUR/USD levels to watch
At the moment, the pair is losing 0.51% at 1.1112 and a breakdown of 1.1098 (200-day SMA) would target 1.1037 (55-day SM) en route to 1.0992 (monthly low Jan.29). On the flip side, the next hurdle lines up at 1.1213 (weekly/monthly high Mar.3) seconded by 1.1239 (monthly high Dec.31 2019) and then 1.1249 (monthly high Aug.6 2019)
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