As investors approach the weekend's highlight event, the release of the much-anticipated US NFP employment data report, the US dollar continued to surprise as it returned to show strength in the market yesterday.
Supporting the strengthening of the US dollar in yesterday’s New York session, the US services PMI data of the ISM survey recorded an upward reading, in contrast to the manufacturing data published earlier in the week.
Initially, the US dollar was seen depreciating after the US ADP employment data report for the private sector posted a dismal reading and could be a poor signal for the NFP employment report.
However, there were additional factors that were seen to influence the subsequent strengthening of the US dollar, namely hawkish comments by members of the Federal Reserve (Fed) on policy tightening measures.
Fed Deputy Chairman Richard Clarida said interest rates could be raised in 2022 and also signaled that bond -tapering measures would be implemented this year or early next year depending on labor market sentiment for the next few months.
On the EUR/USD chart, the price was seen once again testing the 1.19000 resistance zone before plunging nearly 70 pips for the biggest decline this week following the re -strengthening by the US dollar.
The Euro currency was also affected by European zone services data published in the European session yesterday with a less encouraging reading, further complicating price increases.
With the expected strengthening of the US dollar ahead of the NFP report, the price will retest the 1.18000 focus level before the continued decline will return to the support zone of the previous weeks around 1.17700-1.17500.
The lower decline beyond the zone is seen to lead to the main support zone at 1.17000 after the zone managed to support the price rebound in last April's trading.
However, if the price manages to rebound, once again the 1.19000 resistance zone will continue to be tested after 4 consecutive days the zone remains invulnerable to be broken.
Breaking the resistance zone will expect a higher price increase for the movement of the bullish trend heading up to the high level at 1.2000 again.
