The pullback in dollar and yen since early this week seems to have completed with both currencies recovering strongly across the board. AUD/JPY leads the way in early European sessions, diving to as low as 56.58, dragging AUD/USD down to 0.6368. Euro follows the weakness and further pressure is seen after downward revision in PMI services as well ass another poor retail sales report. On the other hand, Sterling remains steady after UK Services PMI unexpectedly improved in Jan and drags the EUR/GBP lower. On the fundamental side, focus will turn to US ADP employment report as well as ISM Non-Manufacturing Index. Technically, the focus will be on intraday supports on EUR/USD, EUR/JPY, AUD/USD and AUD/JPY for confirmation that this week's recovery has completed.

Eurozone's service PMI came in at 42.2 in January, lower than initial reading of 42.5 but still improved slightly from 42.1 in December. Germany's service PMI was also revised down to 45.2 in January, down from 46.6 in the previous month. On the other hand, January's reading for the UK rose more-than-expected to 42.5 from 40.2 in December, suggesting the worst of contraction may have passed. Retail sales in the Eurozone was flat in December on monthly basis, better than consensus of -0.3% drop and revised -0.1% drop in the previous month, as drops in non-food products were offset by sales growth in food, drink and tobacco However, on yearly basis, the gauge contracted -1.6% while November's figure was also revised down to -2.6% plunge.

In the US, ADP employment survey is forecast to show a decline of private employment by -530K in January following -693K in December. Almost -400K positions were probably lost in the service sector while the auto, manufacturing and construction sectors contributed to the remaining loss of jobs. With the new methodology used since late last year, the ADP report is expected to give more accurate forecasts on BLS' employment report. ISM non-manufacturing index probably dropped to 38 in January from 40.1 a month ago as many leading indicators indicated large decline in service-sector growth in January. Exports and imports order could have tested previous low while decline in commodity prices might have sent prices component lower. Layoffs might also have led the employment component to drop below 34.5 in December.