- EUR/USD has breached key 61.8% Fib retracement level of 1.1305.
- The US dollar is gaining ground likely on the back of an upbeat US ISM non-manufacturing number.
- The dollar bulls need a strong ADP number.
EUR/USD is currently trading well below 1.1305 (61.8% Fib R of 1.1234/1.1420) and is flashing red for the fourth consecutive day.
The dollar found takers in the NY session yesterday after the US ISM non-manufacturing data for February came in at the highest level since November.
The weak tone was possibly bolstered by reports stating that Brexit talks between the UK and European officials have once again reached a deadlock.
As for today, the focus is on the US ADP employment data, which is expected to show the private sector added 189K jobs in February vs 213K additions in January.
It is worth noting that the employment sub-index of the ISM non-manufacturing data wasn't particularly impressive. So, the dollar bulls need a strong ADP, else markets will likely start pricing in the possibility of NFP missing estimates by a big margin. The payrolls figure is due for release on Friday.
A better-than-expected ADP could yield a deeper drop toward 1.1250, while a big miss on expectations could fuel a corrective bounce to the 5-day MA, currently at 1.1335.
Technical speaking, the path of least resistance is to the downside. The pair has dropped below 1.13, having created a bearish lower high along 1.1407 (61.8% Fib R of 1.1514/1.1234). The 5- and 10-day MAs are trending south and the 14-day RSI has dipped below 50.00.
- R3 1.14
- R2 1.1374
- R1 1.1341
- PP 1.1315
- S1 1.1282
- S2 1.1256
- S3 1.1223
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