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

US ADP jobs report overview

Wednesday's US economic docket features the release of the ADP report on private-sector employment for February, due at 13:15 GMT. Estimates point to an addition of 200K private-sector jobs during the reported month, up sharply from 109K in January. The data will provide fresh insight into the US labor market conditions and could drive expectations for the official jobs report, popularly known as NFP scheduled for release on Friday.

How could the data affect EUR/USD?

Ahead of the key release, signs of stability in the equity markets hold back traders from placing fresh bullish bets around the safe-haven US Dollar. This, in turn, assists the EUR/USD pair to hold steady above the 100-day Simple Moving Average (SMA) support, currently pegged around the 1.0500 psychological mark. That said, rising bets for a jumbo 50 bps Fed rate hike in March remain supportive of elevated US Treasury bond yields and continue to act as a tailwind for the Greenback. A stronger ADP report will reaffirm hawkish Fed expectations, which, in turn, should push the US bond yields and the USD higher.

Conversely, any disappointment is unlikely to dent the underlying bullish sentiment surrounding the buck as investors might wait for the NFP report to see if the US labor market is cooling down. Hence, any immediate market reaction to a softer print is more likely to be limited, suggesting that the path of least resistance for the EUR/USD pair is to the downside. Traders, however, might refrain from placing aggressive bets and prefer to wait for Fed Chair Jerome Powell's second day of testimony before the House Financial Services Committee.

As Matías Salord, news Reporter at FXStreet explains: “If ADP shows the private sector employment rose by more than 200K, it would reaffirm the “higher for longer” scenario, offering support to the US Dollar and should be negative for US Treasury bonds. On the contrary, it would take a contraction in employment to weigh on expectations. A negative reading could be positive for equities, emerging market currencies… for all, except the US Dollar.”

Meanwhile, Eren Sengezer, Editor at FXStreet, outlines important technical levels to trade the EUR/USD pair: “Interim support for EUR/USD seems to have formed at 1.0530. With a four-hour close below that level, additional losses toward 1.0500 (psychological level), 1.0480 (2023-low) and 1.0450 (static level from December) could be witnessed.”

“On the upside, 1.0560 (former support, static level) aligns as initial resistance before 1.0580 (static level). In case the latter resistance fails, buyers could show interest and EUR/USD could extend its correction toward 1.0600/1.0610 (static level, 50-period Simple Moving Average (SMA) on the four-hour chart),” Eren adds further.

Key Notes

  •  ADP Jobs Preview: A sandwich between Powell and NFP

  •  EUR/USD Forecast: It's all about Powell-inspired USD strength

  •  EUR/USD: 1.0500 can be broken today or tomorrow – ING

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.