EUR/USD: will the major psychological threshold at 1.10 once again protect the euro from a decline?

The EUR/USD pair hit a daily low of 1.0996 yesterday and is currently hovering around the 1.1000 mark, down 100 pips since the beginning of the week. The pair posted another consecutive day of declines yesterday, approaching last month's lows.

A stronger USD pushed the eurodollar pair further down. The greenback was bullish and continued to rise following better than expected North American economic data.

The first report was the ADP Employment Report which showed that the private sector experienced its best month since 2015 last month. Later, the ISM Non-Manufacturing Index climbed to 55.5 last month from 54.9 at the end of last year.

The ISM Services ISM echoed the equally positive manufacturing data released at the beginning of this week, while the ADP bodes well for the official NFP employment report to be released tomorrow, which includes wages and non-farm payroll data.

The Dollar Index rose for the third consecutive day on Wednesday, trading at its highest level since the beginning of December. U.S. yields were also up, while Wall Street stock prices closed higher on Wednesday.

EUR/USD back near the critical 1.10 level

The pair's decline over the past few days has pushed the price back near a key support zone between 1.0979 and 1.1000 (the lows of November and last month). A daily closing price below 1.1000 would be a bearish signal, leaving the euro vulnerable to further declines. The next strong support could then be seen at 1.0939.

A positive signal for the EUR would be a sharp rebound above 1.1000. A resistance level would then come in at 1.1064, at the confluence of the 20 and 100-day moving averages. A higher close above this level would help ease the downward pressure.

Daily EUR/USD chart