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US Dollar Index Stays Above 94.00 On Upbeat ADP Employment Change Data

The ADP Employment Change for September 2020 came in at 749K, which beat the estimate of 650K and also surpassed the previous month’s figure of 428K. 

This report is pooled from actual payroll data of the ADP and shows that private sector employment is now showing signs of recovery, after a dismal performance in August. The report indicates that small businesses were able to post a remarkable recovery, reaching up to 192,000 hirings. However, large enterprises continue to dominate private-sector employment, hiring 297,000 workers. Medium-sized businesses took on an additional 259,000 jobs. 

On a sectoral basis, the services sector added 552,000 jobs, which were spread among the trade/transport/utilities subsector (186K), professional services (78K), education/health (90,000) and hospitality (92K), among others. The goods-producing sector added 196,000 jobs, spread across manufacturing (130K) construction (60K) and mining (7k).

The data has helped to bolster sentiment on the US Dollar Index, enabling it hit an intraday high of 94.18 at the time of writing. 

Technical Outlook for USD Index

After two days of losses, the USD Index has picked up this Wednesday, helped by the ADP report and GDP data which also showed minor improvement. 

The index bounced off the 93.80 support today but requires follow-through buying to target the 94.62 resistance target. Above this level, 95.19 and 95.72 beckon as additional targets to the north.

Conversely, a lack of follow-through buying may weaken sentiment on the DXY, putting the 93.80 support under pressure. A breakdown of this area then brings about an opportunity to target the 93.17 support, provided sellers can breach the previous neckline. Below that area, 92.50 and 91.91 could also become potential targets. 

Key employment data tomorrow (jobless claims) and Friday (Non-Farm Payrolls) will be key to further price action on the US Dollar Index.

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USD Index Daily Chart

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