EUR/USD consolidates gains after finding support above 1.1220

Euro again capped by 1.1250 retreats under 1.1230.
US data show a deceleration in the job market and service sector.

The EUR/USD pair peaked earlier today 1.1254 but failed to hold on top of 1.1250 and pulled back. It continued to retreat even after disappointing US data. Recently found support at the 20-hour moving average at 1.1225 and as of writing trades at 1.1240, up 40 pips for the day.

The greenback is falling across the board, on the back of an improvement in risk sentiment. The negative tone eased after the beginning of the US session but still remains lower. The US Dollar Index is down 0.20%, hovering around 97.00 while the Dow Jones is up 0.27%. Market’s sentiment is being supported by expectations about a US-China deal and on today’s Chinese and EZ data that helped offset concerns about a global slowdown.

Int he US, the data came in mixed. The ADP private employment report, ahead of Friday’s NFP, showed the lowest numbers in 18 months. Service sector data confirmed a slowdown although the Markit PMI was revised higher from the preliminary reading.

Short-term levels to watch

To the upside, the key level is the 1.1250 area. A firm break above would likely strengthen the euro and clear the way for a test of the next resistance seen at 1.1285 (Mar 7 high), then attention would turn to 1.1300. The bullish intraday tone will remain intact as long as the euro holds on top of the 20-hour moving average currently at 1.1225. Below that level, a slide toward 1.1200 seems likely. The key support continues to be the 1.1175/80 area, a break lower could intensify the bearish outlook.

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