EUR/USD: Speculation about the Fed's moves to lead a push below 1.1990

EUR/USD has dropped below 1.1990 after US Treasury Secretary Yellen talked about rate hikes. On Wednesday, two critical US data points are set to rock the currency pair. Yohay Eam, an Analyst at FXstreet, highlights the key levels to watch ahead of data.

See: EUR/USD set to resume falling towards 1.15-1.16 before long – Nordea

1.1990 is a critical separator of ranges

“Treasury Secretary Janet Yellen's hike talk has been reverberating through markets and boosting the dollar.  Walking back these remarks does not seem to help. While Yellen had occasional gaffes also in her previous role, some see her words as the first trial balloon ahead of a bigger move by the bank.” 

“ADP's jobs figures for April are set to show an increase in private-sector employment. A level close to one million positions gained would raise expectations toward Friday's official Nonfarm Payrolls figures. However, it is essential to remember that the correlation between the two statistics has been uneven.” 

“The second release is the ISM Services Purchasing Managers' Index, which is set to remain above 60 points – indicating a robust expansion. Updated estimates could be lower after the disappointing Manufacturing PMI earlier this week. The employment component will be closely watched.”

“The breach of 1.1990 is yet to be confirmed, but it is significant. Euro/dollar broke above that level in mid-April and remained above it – making it a clear separator of ranges. However, now it is beginning to crumble, a bearish sign.”

“Below 1.1990, the next lines to watch are 1.1945 and 1.1925, dating back to earlier in the spring.” 

“Some resistance is at 1.2015, which held euro/dollar from falling. It is followed by 1.2055, which provided support late last month.”