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US Data Initially Weighs On Greenback As Event Risk Set To Intensify

FOREX
  • US ISM services saw a small miss in February at 52.6 (est. 53.0), however there were more notable misses for prices paid 58.6 (est. 62.0) and employment 48.0 (est. 51.4) which contributed to some downside for the greenback on Tuesday. However, depressed vols and upcoming event risk later in the week stalled any downside momentum, with some weakness for equities also bolstering the USD bounce as we approach the APAC crossover.
  • Overall, lower yields in the US have supported the Japanese Yen, with USDJPY (-0.30%) hovering right around the 150.00 mark, but off the 149.71 lows. USDJPY support seen scant into 149.84, but seen stronger into 149.21, last week's low in the pair.
  • In similar vein, EUR/USD reversed well off the post-ISM services intraday peak, keeping today's highs at 1.0876 and just short of key resistance and a notable upside level at 1.0888 - the top of the tail of a shooting star pattern printed on Feb 22, which continues to highlight a possible bearish reversal. The tail of the inverted hammer intersected with the 50-dma - a level pierced, but not convincingly broken in Tuesday trade.
  • This raises focus on the heavier frequency of risk events this week, with Powell's House/Senate testimonies on Weds/Thurs, the ECB decision on Thurs and the NFP release on Friday.
  • A EUR negative, USD positive theme over the next three days would raise focus on 1.0791 - the 50% retracement of the recovery bounce off Feb14's 1.0695. Below here, the bounce would be deemed corrective and could signal a resumption of the over-arching downtrend off the Dec28 high.
  • A busier global docket on Wednesday, with Australian GDP kicking things off, followed by the UK budget release. UK construction PMI and Eurozone retail sales also cross. Later in the day, the Bank of Canada decision and US Jolts will accompany the Fed Chair’s testimony.
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