EUR/USD stays depressed around 1.22 ahead of US ADP, PMI data
|- EUR/USD bounces off intraday low during a three-day downtrend.
- US dollar consolidates amid Treasury yield’s seesaw, cautious mood ahead of NFP.
- ECB, Fed policymakers defend easy money, US-China trade deal and tariff-relief for tech-taxes fail to deliver any moves.
- US ADP Employment Change, ISM Services PMI for May will be important, not to forget second-tier data from Eurozone, Germany.
EUR/USD trims intraday losses while bouncing from an intraday low of 1.2202 prior to Thursday’s European session. Even so, the major currency pair stays down for the third consecutive day as the US dollar consolidates weekly losses amid a quiet Asian session.
The US dollar’s recovery moves could be traced to the market’s typical pre-NFP behavior amid a lack of major data/events. Also contributing to the greenback’s corrective pullback could be the chatters surrounding further stimulus and the US-led efforts to encourage extra taxes for the big technology companies. That said, the US dollar index(DXY) gains 0.05% to 89.95, exerting downside pressure on the EUR/USD prices, by the press time.
On the other hand, ECB President Christine Lagarde’s rejection of the tapering chatters couldn’t convince markets amid rising inflation data. Further, downbeat German Retail Sales, marking the first contraction in three months, joined the Brexit fears to weigh on the regional currency.
Elsewhere, mixed signals from the Fed policymakers and Fed’s Beige Book joins the steady vaccination in the West, as well as the recently rising inoculation in Europe, keep markets hopeful.
Amid these plays, stock futures print mild gains but market fears ahead of the key US ADP Employment Change, an early signal for Friday’s NFP, as well as US ISM Services PMI, exert downside pressure on the EUR/USD.
“We are looking for the May ADP employment change to print at +650k, although we caution that this measure can be out of sync with the official nonfarm payrolls. Initial jobless claims should continue to grind lower as labor market slack is absorbed (market f/c: 388k). The May ISM non-manufacturing survey is set to show an ongoing expansion of the services sector on vigorous consumer spending (market f/c: 63.0),” said Westpac ahead of the release.
Technical analysis
Given the sluggish MACD and a choppy move between 100-day and one-week-old symmetrical triangle, EUR/USD moves remain indecisive inside the 1.2170–1.2240 trading range.
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