US ADP jobs report overview

Wednesday's US economic docket features the release of the ADP report on private-sector employment, due for release at 12:15 GMT. Estimates point to an addition of 193K private-sector jobs in October, down from 208K in the previous month. The data could drive expectations for the official jobs report, popularly known as NFP on Friday, and any positive number would reaffirm the robust US labour market.

How could the data affect EUR/USD?

A stronger-than-expected report could lend some support to the US dollar and prompt fresh selling around the EUR/USD pair. Conversely, any disappointment will add to worries about a deeper economic downturn and weigh on investors' sentiment, which, in turn, should act as a tailwind for the safe-haven buck. That said, the immediate market reaction is more likely to remain limited as the focus remains glued to the highly-anticipated FOMC policy decision, scheduled to be announced later during the US session.

In the meantime, Eren Sengezer, Editor at FXStreet, offers a brief technical overview of the EUR/USD pair and outlines important technical levels: “The Relative Strength Index (RSI) indicator on the four-hour chart moves sideways near 50, highlighting EUR/USD's indecisiveness. On the downside, 0.9880 (Fibonacci 61.8% retracement of the latest uptrend) aligns as initial support before 0.9850 (100-period SMA) and 0.9820 (200-period SMA).  A daily close below that last level could be seen as a significant bearish development and attract bears.”

“0.9900 (psychological level) aligns as interim resistance before 0.9920 (Fibonacci 50% retracement) and 0.9960 (Fibonacci 38.2% retracement). In case the pair manages to clear those hurdles on a dovish Fed surprise, it could, once again, target 1.0000,” Eren adds further.

Key Notes

  •  EUR/USD Forecast: Parity could come back into play on a dovish Fed surprise

  •  EUR/USD: Break below 0.98 to unlock further downside room – ING

  •  EUR/USD to dip into the low-0.90s in the coming months – UBS

About the US ADP jobs report

The Employment Change released by the Automatic Data Processing, Inc, Inc is a measure of the change in the number of employed people in the US. Generally speaking, a rise in this indicator has positive implications for consumer spending, stimulating economic growth. So a high reading is traditionally seen as positive, or bullish for the USD, while a low reading is seen as negative, or bearish.