EUR/USD intermaket: It's about the euro

EUR/USD is falling on Thursday erasing most of yesterday’s gains. Today the ECB left, as expected, monetary policy unchanged while the ADP employment report showed an increase in private payrolls in line with expectations. There were no surprises form the data and neither from the ECB. The Central bank left the door open to more action if needed.

The pair is falling today driven by a weak euro. Yields spreads between US and German bonds remained steady while Federal Reserve rate hike expectations actually dropped but US dollar remained resilient. Greenback dropped in the market during the last hours but it rose versus the Swiss franc and the euro. The Swissy usually follows the direction of the euro during ECB’s days. Stocks in the US are modestly lower while the VIX index flattened.

Tomorrow, the US employment report could have a large impact on expectations regarding US monetary policy (it is the last NFP before the June 14/15 meeting), affecting the dollar. Market consensus points to an increase in NFP of 164K. Today ADP data had no significant influence on Fed rate hike expectations.

EUR/USD bottomed at 1.1144 and it was trading around 1.1155/60, making a reversal after hitting earlier a 1-week high above 1.1200.