EUR/USD Forecast: Licking its wounds with further falls eyed as King Dollar dominates

EUR/USD is "hugging" the round number of 1.1300, marginally down on the day. The US Dollar gained further strength on Tuesday after the ISM Non-Manufacturing PMI beat with 59.7 points in December, reflecting robust growth in America's largest sector and raising expectations for an upbeat jobs report on Friday.

Euro-zone PMIs also beat expectations with the final euro-zone figure coming out at 52.8 points. The 6.9 points gap between both sides of the Atlantic is telling.

Back to the US, Sales of new homes also topped early estimates with 621K annualized in December, providing a not-too-common ray of sunshine for the struggling housing sector, that bears the brunt of rising interest rates.

The greenback enjoys a dominant position that is not fully dependent on data but on other drivers.

See USD strength: 3 reasons why the Dollar is King and Trump is only the President

More US data and ECB tensions

US data remains in the limelight with the ADP Non-Farm Payrolls. The private sector report from the largest provider of payrolls in the US is forecast to show a more modest growth rate in employment in February after printing 213K in January.

Later in the day, New York Fed President John Williams will speak and may move the greenback. The world's most powerful central bank pledged patience on interest rates amid a worsening global outlook, even though the US economy is "in a good place" as Chair Jerome Powell recently said. On Tuesday, Boston Fed President Eric Rosengren repeated the message of patience. 

It is not too early to look at the European Central Bank which makes its rate decision on Thursday. The Frankfurt-based institution is set to leave its policy unchanged and will likely refrain from altering its guidance on interest rates despite worsening data. President Mario Draghi and his colleagues may prefer to wait for developments on Brexit and US-Sino trade talks. 

EUR/USD Technical Analysis 

EUR/USD is suffering downside Momentum, and it trades well below the 50 and 200 Simple Moving Averages on the four-hour chart. The Relative Strength Index (RSI) is still above 30, but it is getting close. A drop below that level will indicate oversold conditions and imply a bounce, but we are not there yet.

1.1290 was the low point in recent hours and the lowest in two weeks. 1.1275 was a swing low in mid-February. 1.1250 was hit twice by the pair around the same time, and 1.1235 is the 2019 low.

1.1310 was a swing low earlier in the week and serves as the initial resistance line. 1.1335 provided support in late February. Close by, 1.1350 capped EUR/USD early in the week and 1.1360 served as support in late February. The next resistance line is already a bit apart: 1.1410, followed by 1.1420 , the high point in February. 

More: EUR/USD has room to more room to fall after slipping below 1.1300 – Confluence Detector