EUR/USD: Well bid above 1.1800, eyes on US ADP, stimulus talks

EUR/USD rises to 1.1816 during the pre-European session on Wednesday. The quote extends the previous day’s gains to attack a three-day top as US dollar drops across the board. Though, the bulls remain cautious ahead of the key US data and the on-going talks concerning coronavirus (COVID-19) relief package.

The US dollar index (DXY) drops 0.14% to 93.11 by the press time. The greenback gauge seems to bear the burden of the deadlock over phase 4 of the COVID-19 package. Although policymakers keep suggesting that a decision will arrive before they go on a vacation during this weekend, market players stay unconvinced considering the larger difference between the Republicans and the Democrats.

While taking the bids, the EUR/USD pair ignores increasing odds of the Sino-American trade discussion. The policymakers are up for a meeting on August 15 despite on-going tussle over TikTok. Elsewhere, pandemic woes in the US and the bloc seem to have been probed by steady numbers and a persistent search for the vaccine.

Amid all these catalysts, the market’s risk-tone remains sluggish with the US equity futures reversing the early-Asian losses to track Wall Street’s gains. Though, stocks in Asia-Pacific remain in the red.

Looking forward, Eurozone Retail Sales and Services PMIs could entertain the pair traders ahead of highlighting the importance of the US ADP Employment Change for July. The early signal for Friday’s key Nonfarm Payrolls (NFP) is expected to recede from 2,369K to 1,500K, which in-turn can extern additional downside pressure on the greenback. Also likely to please the EUR/USD bulls could be the ISM Non-Manufacturing PMI that is expected to soften from 57.1 to 55.

Read: US ADP Employment Change July Preview: Following the high frequency data

Technical analysis

While the 1.1700-1695 area restricts the pair’s near-term downside, bulls may pause for a check around 1.1910 before attacking the 1.2000 threshold.