EUR/USD rebounds after touching its weekly low, awaiting decisions from the Fed and the ECB

• EUR/USD is holding firm around 1.1050 pending FOMC decision.
• The US ADP Employment report for April nearly doubled forecasts as private hiring rose to nearly 300,000 people.
• The US Federal Reserve is expected to hike rates by 25 basis points, though Powell’s message is still uncertain.

The EUR/USD pair extends gains after hitting a weekly low of 1.0942 on Tuesday as traders prepare for Federal Reserve (Fed) and European Central Bank (ECB) monetary policy decisions today and on May 4. May. At the time of writing, the EUR/USD pair is trading around 1.1050, gaining 0.44% from its opening price.

EUR/USD holds steady as US ADP jobs report beats expectations ahead of uncertain Fed decision.

Risk appetite, despite the renewed concerns of US banks. Wall Street is trading in gains, although lower US Treasury yields weakened the US dollar (USD), hence the EUR/USD pair rose.

Thus, the Dollar Index (DXY), which measures the value of the dollar against six currencies, fell 0.54% to 101.41.

The latest data from the US Economic Agenda revealed that private hiring increased above estimates, but wages moderated. The ADP Employment Change report for April reported that the economy added 296,000 jobs, beating forecasts of 148,000. This triggered a reaction in the pair, as EUR/USD fell as far as the 1.1020 zone before bouncing back to its daily high of 1.1060.

Late in the day, the ISM released April’s Non-Manufacturing PMI, also known as the Services PMI, which came in at 51.9, up from 51.2 in March. Digging deeper into the data, the price sub-component remained near its lowest levels since 2020, while the employment index showed moderation.

On the other side of the pond, the Eurozone (EU) agenda published the Unemployment Rate for March, which fell to 6.5%, below estimates and the previous month’s reading of 6.6%.

Meanwhile, EUR/USD traders are preparing for the Federal Reserve’s decision. The odds of a 25 basis point rise stand at 86.8%, swap markets show. According to futures markets, this is the last hike expected by investors, who are already anticipating a 75 basis point rate cut between now and the end of the year.

As for the European central banks, estimates range between 50 and 25 basis points. Although a rate hike of 25 basis points is already expected, it is possible that it will double after the latest report on inflation in the EU. This has been the reason that has supported the EUR/USD pair for the past two months.

EUR/USD technical levels