EUR/USD saw choppy trading after the ADP September report surprised markets with a 32,000 job decline versus expectations of a 50,000 gain. The data initially triggered broad USD selling as yields fell and spreads tightened, allowing EUR/USD to test highs near 1.1779 before stalling. By the New York close, the pair had slipped back to 1.1716–1.1725, down ~0.10%.
Market Drivers
- Weak U.S. Jobs Data: The ADP shock reinforced fears of labor market deterioration, raising the likelihood of deeper Fed cuts.
- USD Recovery: Later in the session, USD regained strength as USD/CNH turned higher after touching 7.1230, while gold and equities lost part of their gains, helping the dollar bounce.
- Fed Policy Lens: With the government shutdown delaying official data, private releases like ADP gain prominence. Markets are pricing in dovish Fed policy, but short-term USD demand remains resilient.
Technical Landscape
- Bearish Candlestick: A daily inverted hammer printed, highlighting selling pressure at higher levels.
- Momentum Indicators: The daily RSI diverged from recent highs, confirming waning momentum.
- Support Levels:
- 1.1716 (NY close low).
- 1.1670–1.1660 (55-DMA and Sept 11 low).
- 1.1606 (Sept 22 base).
- Resistance Levels:
- 1.1779 (overnight high).
- 1.1836 (upper Bollinger).
- 1.1919 (Sept 17 four-year high).
Outlook
While the broader trend remains euro-positive on Fed easing expectations, short-term technical signals suggest vulnerability. A sustained close below 1.1716 risks further downside toward 1.1660. Bulls need to reclaim 1.1780+ for momentum to re-target 1.1836–1.1919.