- EUR/USD gains 0.42%, driven by ADP data and Powell’s remarks.
- US ADP’s February report was robust at 140K, showing improvement from January but falling short of estimates.
- Fed’s Powell, in testimony at Capitol Hill, suggests no immediate rate cuts.
The Euro continued its upward momentum against the US Dollar in the early North American session, supported by a softer-than-expected ADP jobs report in the United States (US). As a result, the EUR/USD advanced by 0.42%, reaching a two-week high of 1.0887 and currently trading at 1.0881.
EUR/USD hits two-week peak, gains momentum ahead of the European Central Bank’s decision
In February, private companies added 140K jobs, falling short of the expected 150K but still reflecting a robust job market compared to January’s 111K. Nela Richardson, Chief Economist of ADP, noted that job gains remain solid, and while wage gains are trending lower, they still outpace inflation.
However, the spotlight shifted to the prepared remarks of US Federal Reserve Chairman Jerome Powell at Capitol Hill. Powell stated that the Fed does not anticipate reducing rates until there is greater confidence in inflation moving sustainably toward 2%. He acknowledged that rates had peaked, recognized progress on inflation, and mentioned the current restrictive stance’s impact on economic activity and inflation. Powell indicated the intention to ease policy at some point in the year, contingent on incoming data, and noted that the risks to achieving the Fed’s dual goal are moving into better balance.
Following the data and Powell’s remarks, the EUR/USD experienced a sharp rise. The US Dollar Index (DXY), tracking the dollar against six other currencies, declined over 0.30% to 103.47. US Treasury bond yields fell across the short and long ends of the curve.
Additionally, traders are gearing up for the European Central Bank’s (ECB) monetary policy decision on Thursday. Analysts anticipate no change in policy, but market participants will scrutinize any hints regarding a potential rate cut in the upcoming June meeting.
EUR/USD Price Analysis: Technical outlook
The currency pair has surpassed a descending resistance trendline traced from January’s peaks and the 50-day moving average (DMA) located at approximately 1.0860/70, paving the way for a potential challenge of the 1.0900 level. Upon surpassing this level, the subsequent hurdle is at 1.0932, marked by the swing high on January 24, followed by the peak on January 11 at 1.0999, just below the 1.10 mark. Conversely, if prices struggle to maintain levels above the 1.0860 region, anticipate a more substantial retracement towards the convergence of the 100 and 200-DMAs, situated around 1.0831/34, before testing the 1.0800 level.
