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The EUR/USD traded in a narrow range today (Tuesday) but still managed to finish the day in positive territory, closing up 11 pips at $1.3081. Economic data out of the both the EU and U.S. was light, but will pick up as we approach the end of the week with the ECB Interest Rate Decision on Thursday, as well as U.S. Non Farm Payrolls on Friday. However, before the real fireworks begin, some analysts are pointing to tomorrow's ADP data out of the U.S. as a possible catalyst for tomorrow's price action.

According to Sean Callow at Westpac:

We have the ADP report plus non manufacturing ISM jobs components tonight. There is a great deal of focus on jobs data in the U.S. given recent speculation about the Fed tapering its asset purchase programs. ADP disappointed in April but has not had much directional success in picking payrolls outcomes. The ISM report on Monday casts a long shadow over tonight's non manufacturing report. Arguably, markets will be set up for a softer outcome given the weaker U.S. dollar in recent sessions. Tonight's data could prove to be important for FX markets."

Some analysts were pointing towards earlier comments from Federal Reserve officials which hit the tape earlier in the day. Particularly given the fact the comments were on the hawkish side, this seemed to limit late day advances in the EUR/USD

According to analysts at NAB Global,

Esther George, the Kansas Fed President, urged the central bank to cut back on its $85 billion per month program because of the improving economy. She also expressed concern that the current low interest rate environment was encouraging investors to buy riskier assets. Also, John Williams from the San Francisco Fed said that a modest pull back in the bond buying program could be appropriate as early as this summer.

Given all the focus on the U.S. Payroll Data due out later in the week, other analysts were reminding not to overlook the data out of Europe tomorrow, which although is most likely not a game changer ahead of the ECB Rate Decision, could still influence tomorrow's price action.

According to Kathy Lien at BK Asset Management,

final service sector data is scheduled for release tomorrow along with eurozone GDP and retail sales, but none of these reports are game changers for the ECB. In other words, they won't affect the central bank's tone on Thursday. The comments from ECB member [Benoit] Coeure today summed up the current state of the eurozone economy best - he said the region is on a slow path to recovery and will return to growth by year-end.

From a technical perspective, the pair has been putting in some impressive gains so far this week, which has helped paint a more constructive technical picture on the daily chart. Short-term moving averages are now in bullish set up with price above both upward sloping 9 and 20 dma's, which could help keep pullbacks limited as we progress through the rest of the week. The RSI (14) is approaching critical resistance at 60, the upper end of the bearish zone (between 20-60) which it has has not been able to take out since early February. On a final note, the ADX (7) on the daily chart is starting to show signs of increasing trend strength, sitting at the 28 level and sloping upward. To conclude, the above developments are all constructive and may just help take the euro up near the top of the recent trading range to $1.3200.

Source: EUR/USD Technical Indicators Beginning To Look More Constructive