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Euro falters ahead of ECB announcement

The positive mood enjoyed by global financial markets failed to materialize in the FX market as the US dollar stands as the best performer across the board. European currencies weakened despite positive economic data as the upcoming ECB and the BoE announcements present modest downside risk for the euro and pound respectively.

Another sign of improvement in the labor market ahead of the NFP on Friday fueled USD strength at the beginning of the NY session. The ADP private-sector employment report showed the economy added more jobs than expected in February, reaching its highest in a year at 198,000.

Meanwhile, rangebound trade and some cautious may prevail ahead of the US jobs report on Friday, but according to the Wells Fargo analyst team, employment figures "should provide some direction for FX markets heading into next week".

"With the ECB tomorrow though we are likely to see more consolidation today", says the TD Securities team.

Euro threatens recent lows

The EUR/USD resumed its slide on Wednesday and briefly fell below the 1.3000 round level with Italy's political uncertainty also weighing on the shared currency.

Technical indicators remain bearish at this point, favoring a fall towards 1.2900/08 (psychological level/ Fib 76.4% of 1.2660/1.3710) ahead of the 1.2880 zone. However, some consolidation is expected ahead of the central bank decision and the US jobs report. On the other hand, a break above 1.3100 could encourage buyers and lift the pair, although regain of the 1.3160 area (Feb 28 high) would improve the outlook.

"It is worth noting though that the tone of most EUR crosses is soft at the moment", says TD securities. "For EURUSD, key intraday resistance comes in near 1.3075, and we continue to favour an extension lower toward the upper 1.28/low 1.29 area in the next couple week".

Forex: EUR/USD clings to 1.3000

The sentiment surrounding the euro remains depressed on Wednesday, although the single currency has managed to leave behind session lows in the area of 1.2985/90 and advance to the region of the 1.3000 handle...
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