EUR/USD – No game-changer but US data highlights weaknesses in the economy

  • ADP posts 177,000 new jobs but traders not convinced
  • US Q2 GDP revised lower to 2.1% (2.4% previously)
  • USD pares six week gains after weaker figures this week

The recovery in equity markets appears to have stalled on Wednesday as traders likely eye the big economic releases later in the week.

The ADP and revised GDP numbers may attract some attention but they were never likely to have too great an impact. The ADP report has long been ignored as a reliable precursor to the NFP report on Friday and at times it’s frankly been wildly off.

That it’s come in at a reasonable 177,000 doesn’t offer any real insight in terms of Friday’s payrolls, with the focus instead remaining on them in relation to yesterday’s JOLTS data which saw a marked decline. If we see a trend of weaker hiring and fewer job openings then the Fed will be more at ease ending the tightening cycle.

Today’s data was never likely to be overly impactful with tomorrow’s inflation, income, and spending figures, prior to Friday’s payrolls, always the primary focus. That could well set the tone for September ahead of some major central bank meetings.

A correction or a bullish continuation?

EURUSD has been buoyed by the recent economic data, with the figures indicating that the higher for longer narrative may be less intense than feared.


Source – OANDA on Trading View

The pair has now rallied for three days and is closing on an interesting level around 1.10 where it may run into some resistance from the 55/89-day simple moving average band. It’s also a notable psychological level.

There are also some interesting Fib levels around here if this is merely a corrective move following the sell-off of the last six weeks.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.