- EUR/USD attracted some dip-buying on Wednesday amid a subdued USD price action.
- The USD remained on the defensive following the disappointing release of the US ADP report.
- Private-sector employment rose by 330K July as against 695K expected and 680K previous.
The EUR/USD pair reversed an early dip to levels below mid-1.1800s, or multi-day lows and moved to the top end of its intraday trading range post-US ADP report, though lacked any follow-through.
The pair witnessed some selling in reaction to the downward revision of the Eurozone services PMIs for July but managed to attract some dip-buying amid a subdued US dollar price action. Firming market expectations that the Fed will stick to its ultra-lose monetary policy stance for a longer period continued acting as a headwind for the greenback. This, in turn, was seen as a key factor that extended some support to the EUR/USD pair.
The USD bulls remained on the defensive following the disappointing release of the US ADP report, which showed that private-sector employers added 330K new jobs in July. This was well below consensus estimates of 695K and June's downwardly revised reading of 680K (692K reported previously). The data added to worries about the potential economic fallout from the fast-spreading Delta variant of the coronavirus and weighed on the greenback.
That said, the prevalent cautious mood around the equity markets might extend some support to the greenback's relative safe-haven status and cap gains for the EUR/USD pair. Investors might also be reluctant to place any aggressive bullish bets ahead of Friday's release of the closely-watched US monthly jobs report. Hence, it will be prudent to wait for some strong follow-through buying before positioning for any further appreciating move.
Technical levels to watch
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