A Drop In The ADP Employment Report Would Contradict Bearish Dollar Outlook

Daily Forex Technicals | Written by DailyFX | Mar 04 09 05:32 GMT |

Fundamental Outlook The February ADP employment report is expected to show that the economy lost another 630,000 non-farm private jobs. The report has improved as an indicator for the U.S. Non-farm payroll report due out on Friday and thus may have a greater impact on price action. The mounting job losses have been a main source of risk aversion in addition to the banking troubles. Once traders see past the issues of the financial system, weaker earnings lie ahead as the U.S. consumer continues to retrench. Therefore, another month of massive job losses could add the prevailing risk aversion in the market place and fuel bullish dollar sentiment. Of course there is the risk that the greenback trades on the fundamental impact of the weak labor market on the U.S. economy which would validate the bullish Euro/US dollar technical outlook. The EURUSD is marking time but there are signs of strength such as today's outside day that suggest the EURUSD is preparing for a significant rally. The best count treats the consolidation since late January as a triangle, which would place the drop from that triangle as wave 5 in the 5 wave decline from the December high. Under this count, a low is in at 1.25 and price is headed higher in order to more fully correct the decline from 1.47. If 1.25 is broken, then there is the possibility that the decline from 1.33 is an ending diagonal as wave 5. Reward to relative risk is high for bulls at this point, irrespective of which count is correct. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.