EUR/USD drops toward 1.1850, extending the correction

The EUR/USD reversed after approaching 1.1900 and recently reached a two-day low at 1.1854 as the US dollar strengthened across the board. The DXY turned positive as US stocks trimmed gains. The greenback gained momentum and recovered ground while at the same time the euro printed fresh monthly lows versus the Swiss franc and failed to hold to gains versus the pound. Stocks in Wall Street moved off highs. The Dow Jones is up by 0.17%, while the Nasdaq slides 0.54%. The 10-year yield stands at 1.17%, near the weekly low, and the DXY gains 0.08%.

Regarding economic reports, factory orders rose more-than-expected 1.5% in June. On Wednesday, the ADP private employment report is due, on Thursday, initial jobless claims and on Friday, Nonfarm payrolls. The next support in EUR/USD is seen around 1.1850 (July 30 low) followed by 1.1825/30 and 1.1805. The 20-day moving average, currently at 1.1820, is flat, about to turn to the upside. On the upside, the key resistance is seen around 1.1885/1.1900. A firm break above would suggest more gains for the euro; with the next resistance levels at 1.1940 and 1.1990.