Daily Market Update
March 05, 2026EUR/USD ranged from the high 1.15’s to mid 1.16’s overnight. A modest improvement in risk sentiment made it difficult for the US Dollar (USD) to build on its weekly gains on Wednesday but upbeat data releases from the US and news pointing to a widening crisis in the Middle East helped the currency keep its footing.
The data from the US showed on Wednesday that the Institue for Supply Management (ISM) Services Purchasing Managers’ Index (PMI) rose to 56.1 in February from 53.8 in January, reflecting an ongoing expansion in the services sector’s business activity at an accelerating pace.
Additionally, Automatic Data Processing (ADP) reported that employment in private sector rose 63K in February, surpassing the market expectation of 50K.
Late Wednesday, the US Senate rejected a resolution that was aimed at forcing US President Donald Trump to seek congressional approval for further military action against Iran.
Meanwhile, CNN reported that a top US official said that the US will start attacking deeper into Iran, noting that the operation is still in its early days.
Additional details showed that the number of people claiming jobless benefits rose to 28.8K in January, pointing to continued softening in the UK labour market at the start of 2026.
Furthermore, the rate of annual wage growth also moderated during the reported period, dropping to its lowest level in almost four years.
The US Dollar gains as upbeat United States ADP Employment and surprisingly strong ISM Services PMI data for February have forced traders to pare bets supporting interest rate cuts by the Federal Reserve (Fed) in the July policy meeting.
The ADP reported that the US private sector created 63K fresh jobs in February, significantly higher than 50K estimates and the prior reading of 11K.
Meanwhile, the ISM report showed that the Services PMI arrived higher at 56.1, while it was expected to come in lower at 53.5 from 53.8 in January.
According to the CME FedWatch tool, the odds of the Fed reducing interest rates in the July meeting have increased to 50.2% from 37.9% seen on Tuesday.
In addition to diminishing dovish Fed bets, broadly firm demand for safe-haven assets amid heightened conflicts in the Middle East is also supporting the US Dollar.
The war between the US, Iran, and Israel seems unlikely to end in the near term as Tehran denies reports stating that it is willing to talk on truce.
Though the US Dollar outperforms the Japanese Yen (JPY), the latter is up against its other peers as its safe-haven demand has also improved amid the US-Iran war.
Source FX Street
