EURUSD Softer Ahead of US Manufacturing PMI

Manufacturing PMI on WatchThe US Dollar is back in focus today with the latest US ISM manufacturing reading due later. Recent strength in US data has been feeding into market expectations of fresh tightening from the Fed. Pricing for a hike this month has jumped from around the 50% mark a few weeks ago to around 90% currently. Alongside strength in data, we’ve heard consistently hawkish comments from Fed’s Powell recently which have emboldened the market’s hawkish view.Employment the FocusGiven the Fed’s data dependent stance, incoming US data is attracting an increasing amount of focus with upside surprises driving USD higher ahead of the next FOMC. Looking at today’s data, the market is looking for an uptick to 47.2 from 46.9. While still in negative territory, an increase like that (if confirmed) should be enough to keep the hawkish Fed narrative on track, particularly with the more important NFP data coming up later in the week. Consequently, traders will be paying close attention to the employment component of the data ahead of that release on Friday.Technical ViewsEURUSDFor now, EURUSD remains above the 1.0785 level. However, with the broken bull channel lows holding overhead as resistance, risks of a deeper correction lower are growing. Should price move back below the 1.0785 level, the focus will be on 1.0515 as the next support level to watch. To the topside, 1.1126 is the next resistance to note.