Dollar extends weakness following downbeat ADP data; US services PMI and NFP reports eyed for further signals

The dollar index fell to a one-week low on Thursday, extending its weakness for the second consecutive day. This decline was driven by dovish comments from Fed Chair Powell and a weaker-than-expected ADP private sector payrolls report.

The fresh drop broke below the daily Tenkan-sen and is now pressuring pivotal support levels in the 105.00/104.90 zone (psychological level / 38.2% Fibonacci retracement of the 103.61/105.78 rally / daily cloud top).

A firm break below this zone would generate an initial reversal signal and open the path for further retracement of the 103.61/105.78 rally.

The technical picture on the daily chart is weakening and supports this scenario, though increased resistance is likely around the 105 level.

Markets are awaiting the release of the US services PMI (June forecast at 56.7 vs. May’s 58.1), which could further weaken the near-term structure if the June figure meets or falls below consensus.

The US labor report on Friday will also be closely watched as one of the key economic events this week.

Res: 105.27; 105.39; 105.50; 105.78
Sup: 105.00; 104.90; 104.70; 104.44