US ADP jobs report overview

Wednesday's US economic docket highlights the release of the ADP report on private-sector employment, scheduled at 12:15 GMT. Following a big miss in the previous month, economists expect a strong report and an addition of 613K new jobs in August.

Yohay Elam, FXStreet's own analyst, offered his take on the upcoming data and explained: The Delta virus variant has been spreading in the US for many months but has taken a more massive toll in hospitalizations and deaths only in August. That has sunk consumer confidence and probably caused less shopping, less hiring by businesses and also reluctance to return to work. While there are initial signs that Delta is reaching its peak, any resumption in hiring may wait until September or later on.

How could the data affect EUR/USD?

Ahead of the key data, a strong follow-through uptick in the US Treasury bond yields helped ease the recent bearish pressure surrounding the US dollar and acted as a headwind for the EUR/USD pair. That said, uncertainty about the likely timing of the Fed's tapering plan and fading hopes for an early lift-off held the USD bulls from placing aggressive bets.

A weaker reading will further dampen prospects for any policy move by the Fed in the near future and prompt fresh selling around the USD. Conversely, the market reaction to a stronger reading is more likely to be muted as investors are likely to wait for a confirmation from Friday's release of the official jobs report (NFP). This, in turn, suggests that the path of least resistance for the major is to the upside.

Meanwhile, Yohay outlined key technical levels to trade the EUR/USD pair: “Some resistance is at the daily high of 1.1813, followed by 1.1830 and 1.1845, the latter being Tuesday's peak. Further above, 1.1860 and 1.1910 are eyed. Critical support awaits at 1.1780, which capped EUR/USD and later served as support. It is also where the 200 SMA hits the price. Further down, 1.1740, 1.1725 and 1.1695 are eyed.”

Key Notes

  •  ADP NFP Quick Preview: Three reasons to expect a dollar downer

  •  EUR/USD Forecast: Euro set to rally on newfound ECB hawkishness, bullish technical setup

  •  EUR/USD set to rise on weak US data amid hawkish ECB commentary – SocGen

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.

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