The stronger-than-expected ADP report failed to have a major impact on the U.S. dollar. The private report showed companies added 214k workers in February, indicating the U.S. labor market remains strong. However, ahead of tomorrow's highly anticipated payrolls report, traders should not expect too much. It would need an unambiguous strong report with payrolls figures exceeding 200k and average hourly earnings showing an accelerated growth in order to revive the dollar rally.
Expectations of imminent rate hikes by the Federal Reserve are being pushed back, while market participants are currently seeing a 38 percent chance of an increase in June. Consequently, the dollar rally could be paused until the market will receive fresh hawkish hints from the Fed.
The best performer yesterday was the British pound, which experienced a relief rally towards 1.41. But traders should not be fooled by the recent recovery, as sterling remains vulnerable to losses in the medium-term. We expect the rebound in the currency pair to be short-lived with gains being capped at 1.41 or 1.4160. If GBP breaks above 1.4160 a bullish extension would be possible until 1.4230. However, the risk is to the downside and traders should focus on a break below 1.39.
The most important data from the U.K. will be Services PMI, scheduled for release at 9:30 GMT. If the report disappoints, sterling could start giving up its gains.
GBP/USD
The euro continued its sideways move and traded well above 1.08. Whether we will see increased momentum in the near-term will hinge on the performance of the U.S. dollar and thus U.S. data.
We see the currency pair trading within a downward channel. Based on that channel, corrections could be currently limited until 1.0940 before shifting the focus to a break of 1.08. 
The most important piece of economic data before the NFP report will be the ISM Non-Manufacturing index, due for release at 15:00 GMT. Any significant change could affect the USD accordingly. Before coming to the ISM index, we will also keep an eye on U.S. Jobless Claims (13:30 GMT) even if data is not expected to have a significant impact on the greenback.
Here are our daily signal alerts:
EUR/USD
Long at 1.0885 SL 25 TP 40
Short at 1.0830 SL 25 TP 20, 50
GBP/USD
Long at 1.4110 SL 25 TP 40
Short at 1.4070 SL 25 TP 20, 35
We wish you good trades and many pips!
Disclaimer: Any and all liability of the author is excluded.