- US dollar gains momentum and extends gains following US data.
- EUR/USD at a critical support level, could post the lowest close in months.
The EUR/USD pair printed a fresh daily low at 1.0995 and it is hovering around 1.1000, down a hundred pips so far during the week. The pair is falling for the third day in a row, moving closer to the January lows.
A stronger US dollar pushed the EUR/USD further to the downside. The greenback was up in the market and rose further following US economic data that surpassed expectations.
The first report was the ADP employment that showed the private sector having in January the best month since 2015. Later the ISM non-manufacturing index climbed to 55.5 in January from 54.9 in December.
The ISM referenced the positive manufacturing data released on Monday, while the ADP bodes well for the official employment report due on Friday that includes non-farm payrolls and wage data.
The DXY is up for the third consecutive day, trading at 98.25, the highest since early December. US yields are also higher while equity prices in Wall Street are again rising sharply with the Dow Jones up 1%.
EUR/USD Back near critical level
The decline of the EUR/USD over the last three days pushed the price back near a key support area, between 1.0980 and 1.1000 (November 2019 and January 2020 lows). A daily close below 1.1000 would be the lowest since October, leaving the euro vulnerable to more losses. The next strong support might be seen at 1.0940.
A positive signal for the euro would be to hold above 1.1000. The strong resistance level is seen at 1.1065, the confluence of the 20 and 100 day moving averages. A close above, would ease the bearish pressure.