Disagreements within the Fed and weak ADP data put pressure on the dollar, while the euro takes a breather

XM Foreign Exchange APP News - The euro against the US dollar continued its downward trend, falling below Monday's low of 1.1585 after encountering resistance at the 1.1600 mark. As of press time, it rebounded to 1.1596, approaching the weekly low. Although the euro recovered some of its losses during the session, the overall trading volume was still limited to a narrow range and continued to be in a weak situation. Investors remained wary of excessively aggressive trading. The U.S. dollar basically held on to most of yesterday's gains, global stock markets fell into a sell-off, and expectations of continued declines in U.S. stock futures strengthened market risk aversion. Many Federal Reserve officials released cautious remarks on interest rate cuts, prompting market upgrades. The U.S. economic data released on Monday performed better than expected, providing support for the dollar: the New York manufacturing index rose to 18.7 in November, far exceeding October's 10.7 and market expectations of 6.0, hitting a nearly one-year high; the U.S. Census Bureau delayed the release of August construction spending increased by 0.2%, an unexpected drop of 0.1%, and the July data was revised upward from a decrease of 0.1% to an increase of 0.2%. Looking back at the European market, economic data were almost blank during Tuesday's session. The euro lacked local fundamental support, and its short-term trend relied entirely on the strength of the US dollar. Although the US ADP data slowed down the decline in employment, it still maintained a downward trend, and the euro was boosted by this. Policy game: Internal differences within the Federal Reserve, potential support for the euro. The policy stance within the Federal Reserve is clearly divided, becoming a potential buffering factor for the euro exchange rate. Federal Reserve Vice Chairman Philip Jefferson made it clear yesterday that the pace of interest rate cuts needs to be prudent in the process of gradually approaching neutral interest rates. In contrast, nextGovernor Christopher Waller, one of the five core candidates for chairman of the Federal Reserve, has publicly advocated continuing the process of cutting interest rates. He warned that the U.S. labor market is on the verge of stagnation, with wages falling, job vacancy rates, and turnover rates falling simultaneously, reflecting shrinking labor demand and no need to worry about a rebound in inflation. Based on this, Waller clearly supports another 25 basis points cut at the December 10 interest rate meeting. The market's current implied probability of an interest rate cut has reached 46%. Brown Brothers Harriman Bank (BBH) The current market focus is highly focused on the economic data released today and the speeches of Federal Reserve officials, which directly affects the short-term trend of the euro against the US dollar. At the same time, the U.S. ADP weekly employment report showed that in the four weeks to November 1, 2025, the private sector lost an average of 2,500 jobs per week. Last week's report showed that the U.S. private sector laid off an average of 11,250 people per week in the four weeks to October 25. Weak labor demand showed that the U.S. dollar index fell 0.2% with the release of the data, and the euro received a boost and closed in the red. The number of people continuing to apply for unemployment benefits in the week ending October 18 rose to the highest level in the same period in the past two years, reflecting the lengthening employment cycle of job seekers. Other data: August factory orders data (expected to rebound 1.4%, falling 1.3% in July), September international capital flow report (TICflows). (ADP Employment Trend Chart) This week’s key: The highlight of this week’s trading in September is the September non-farm payrolls report released on Thursday. This data will further clarify the Federal Reserve’s policy path. The public remarks of Federal Reserve Governor Michael Barr and Richmond Fed President Tom Barkin (a non-voting member of this interest rate meeting) may further reveal the policy direction in December. The current market expectations for an interest rate cut in December remain below 50%. The performance of non-agricultural data is likely to break the current narrow range of fluctuations in the euro against the US dollar and become the core catalyst for the exchange rate breakthrough. The euro continues to fluctuate around the 1.1600 mark against the U.S. dollar. Although there is pressure from bulls, the euro has rebounded strongly recently. In conjunction with the long positive line of the euro at the time of the U.S. non-farm payrolls on August 1, the euro has also shown a double-bottom bullish pattern. At present, the exchange rate is still in a stalemate with both long and short positions. The current pressure level is 1.1600 and the support level is 1.1500. (Daily chart of EURUSD, source: Yihuitong) At 21:49 Beijing time, EURUSD is currently trading at 1.1598/99.

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