When is the US ADP employment report released and how could it affect EUR/USD?

ADP US Employment Report

Featured on Wednesday’s US economic calendar is the ADP Private Sector Employment report for May, due at 12:15 GMT. Consensus estimates point to an addition of 170,000 private sector jobs during the reporting month, a sharp drop from 296,000 in April. The data will provide a new insight into US labor market conditions and set expectations for the official employment report, popularly known as the NFP, scheduled for Friday.

According to Yohay Elam, FXStreet Senior Analyst: “After jumping to the highest level since July 2022 in the last April release, the upcoming May report could be weak. If my scenario materializes, the knee-jerk reaction of investors would be to sell the US dollar given the estimate that the chances of a rate hike in June are lower”. It is essential to note that Federal Reserve (Fed) officials are divided on whether to increase borrowing costs or pause. Bond markets reflect that uncertainty with roughly even odds – and any data could make a difference.”

How could the data affect EUR/USD?

Awaiting US labor market data, the dollar (USD) remains below its highest level since mid-March, set on Wednesday, amid reduced bets on another 25-point rate hike. bases by the Federal Reserve (Fed) in June. Therefore, any disappointment from the ADP report could trigger further USD selling, allowing the EUR/USD pair to consolidate its modest intra-day positive move above the 1.0700 signal.

Conversely, a stronger reading is unlikely to impress USD bulls amid bets that the Fed will finally pause its rate-raising cycle and ahead of the official jobs report, popularly known as the NFP. of Friday. This, in turn, suggests that the immediate market reaction to a positive surprise is more likely to be subdued, warranting some caution before making aggressive bearish bets on the EUR/USD pair.

eren sengezereditor of FXStreet, offers a brief technical perspective and outlines the important technical levels to trade the cross: “EUR/USD remains clear of the downside retracement, but has yet to achieve a four-hour above-average close 20-period SMA currently sitting at 1.0700 Should this level prove support, the pair could target 1.0740/50 (50-period SMA, 61.8% Fibonacci retracement level of the last uptrend) and 1.0800 (100 period SMA, 50% Fibonacci retracement).

“If EUR/USD breaks below 1.0680 and returns inside the descending channel, 1.0650 (midpoint of the descending channel) and 1.0630 (lower bound of the descending channel) could be considered next support levels,” adds Sengezer.

About the US ADP Employment Report

The change in employment published by Automatic Data Processing, Inc (ADP), is a measure of the change in the number of people employed in the United States. In general, an increase in this indicator has positive implications for consumer spending, stimulating economic growth. Thus, a high reading is traditionally considered positive, or bullish, for the dollar, while a low reading is considered negative, or bearish.