US Dollar slips as ADP collapse offsets hot services

• The US Dollar Index eases 0.15% to 99.71 after private hiring undershoots expectations.
• ADP Employment Change rose just 44K in July, less than half the 70K forecast and down from 98K.
• The ISM Services PMI missed consensus at 54.1, with the Employment Index sliding into contraction at 47.4.

The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against a basket of six major currencies, trades modestly lower near 99.80 on Wednesday, shedding around 0.15% after a stagflationary batch of United States (US) data. The Greenback holds below the 100.00 threshold for a fourth consecutive session, although losses remain contained as firmer price components complicate the dovish read.

The ADP Employment Change was the day's clearest disappointment. Private payrolls expanded by just 44K in July, less than half the 70K consensus and a sharp deceleration from the 98K recorded in June. The figure raises the stakes for Friday's Nonfarm Payrolls report and suggests hiring momentum is fading more quickly than the resilient activity surveys had implied.

The July ISM Services Purchasing Managers Index (PMI) reinforced that message beneath the surface. The headline index came in at 54.1, below the 54.5 forecast but still above June's 54, keeping the sector in expansion. The Employment Index, however, collapsed to 47.4 from 51.2, dropping into contraction territory and corroborating the weak ADP print. New Orders offered a counterweight, jumping to 57.2 from 55.1 and pointing to solid underlying demand.

The ISM Services Prices Paid index climbed to 70.3 from 67.7, moving further above the levels the Federal Reserve (Fed) should consider comfortable and signaling that cost pressure in the services sector continues to build even as the labor market cools. That combination limits the scope for markets to price additional easing and helps explain why the DXY's decline has been shallow relative to the size of the employment miss.

Attention now turns to Friday's Nonfarm Payrolls report, which will determine whether the ADP shortfall reflects a genuine turn in labor demand or the survey's well-documented tendency to diverge from the official count. The Fed's Cook is also scheduled to speak, with markets looking for an assessment of how policymakers weigh softening employment against firming services prices.

Technical Analysis:

On the 4-hour chart, US Dollar Index Spot trades at 99.71. The near-term bias remains bearish as price holds below both the 20-period and 100-period Simple Moving Averages (SMAs), which now act as dynamic resistance around 99.89 and 100.78, respectively. A cluster of horizontal barriers between 99.78 and 100.06 reinforces the topside cap, while the Relative Strength Index (RSI) at 32.37 hovers near oversold territory, suggesting persistent but somewhat stretched downside pressure.

On the topside, initial resistance is located at 99.78, followed by 99.90 and 99.95, with a stronger hurdle emerging near 100.06. Above these, the 100-period SMA at 100.78 marks a more significant medium-term ceiling that would need to be reclaimed to ease the prevailing bearish tone.

(The technical analysis of this story was written with the help of an AI tool. Know more.)