EUR/USD sidelined near 1.1240 ahead of PMIs, ADP

The single currency is alternating gains with losses vs. the greenback on Thursday, prompting EUR/USD to navigate within a tight range ahead of key data releases.

EUR/USD now looks to ADP, ISM

The pair is struggling to advance further north of the 1.1250 area for the time being, as market participants seem to be waiting for key US results from the labour market and the manufacturing sector.

Renewed selling pressure hit the buck in past sessions, motivating spot to rebound from the 1.1100 neighbourhood – or multi-day lows – seen on Tuesday, to earlier tops around 1.1250. On the opposite side, the US Dollar Index faded its spike to the area of 97.70 and quickly receded to as low as 96.80.

The rally in the pair seen in May (up from 1.0850 to 1.1250) has been largely originated in USD-weakness, stemmed from the rising effervescence in the US political arena while scepticism over the ability of the Trump’s administration to deliver the promised fiscal stimulus motivated investors to unwind further USD-long positions.

However, EUR does appear supported by increasing hopes of a more hawkish ECB in the upcoming months (although a change in the message is unlikely to show at the June meeting), while speculative positioning has shifted to net long for the first time after three years.

In the data space today, final May manufacturing PMIs are due in Europe, while the ADP report, the ISM Manufacturing and the speech by FOMC’s J.Powell (permanent voter, centrist) should keep the attention on the buck later in the NA session.

EUR/USD levels to watch

At the moment, the pair is losing 0.07% at 1.1236 facing the immediate support at 1.1165 (low May 31) followed by 1.1108 (low May 30) and finally 1.1073 (76.4% Fibo of 1.1300-1.0339). On the flip side, a breakout of 1.1257 (high Jun.1) would target 1.1268 (2017 high May 23) en route to 1.1300 (high Nov.9 2016).