EUR/USD Forecast: All eyes on ADP payrolls and ISM PMI

• EUR/USD forecast focuses on whether upcoming US private sector data can halt dollar strength
• Equity markets off earlier lows, Bitcoin turns positive
• Euro may find medium-term support from improving data and Germany’s fiscal push

 

The EUR/USD forecast is at an intriguing crossroads this week, with the pair hovering just below the $1.15 mark. The dollar’s recent resurgence has been fuelled by a mix of risk-off sentiment and a hawkish undertone from the Federal Reserve chair Jerome Powell. Yet, one can’t help but feel the greenback’s run may be nearing the end. The euro, while slightly battered, could soon start showing hints of resilience thanks to slightly better Eurozone data and an ECB that seems content to sit on its hands for now.

 

Stocks off lows but sentiment remains cagey

 

Markets are caught in an awkward pause. Wall Street’s AI-fuelled optimism was beginning to look overstretched, causing the major indices to slide in the last couple of days with investors struggling to justify lofty valuations amid a lack of fresh catalysts. The S&P 500 futures dipped again overnight, mirroring declines in European equities before managing a modest rebound. A narrow band of mega-cap tech stocks has been doing the heavy lifting, leaving the broader market uncomfortably exposed. A wobble in the AI narrative could quickly ripple through sentiment, keeping traders cautious. Still, dip-buying remains the reflexive move of this cycle, and a bounce in stocks could well be the spark that sends the US dollar back down and revives pairs like the EUR/USD. Will that happen today?

 

 

 

ADP payrolls could be the turning point

 

With official economic data streams frozen, all eyes are on private sector indicators such as the ADP employment report and ISM services PMI. The ISM manufacturing figures earlier this week were already softer than expected, adding to the sense that US growth is slowing. Should the ADP print disappoint, it could reinforce the case for a December rate cut—something markets had priced out slightly after Chair Powell’s cautious tone at last week’s FOMC presser.

 

The ADP is expected to print +32K vs. -32K last, effectively wiping out the losses from the prior month. Any stronger print of say 50K+ should be good news for the dollar, while anything short of expectations could support the EUR/USD forecast. Meanwhile, the ISM services PMI is seen printing 50.7 vs. 50.0 last on the headline front. Watch out for the employment component of the ISM, which contracted but at a slower pace last time to 47.2 from 46.5 in August. It needs to climb above 50.0 to point to expansion.

 

Even within the Fed, the mood appears divided. Chicago Fed President Austin Goolsbee has warned against premature easing, while others like Steven Miran argue that policy is already too tight. Powell, predictably, remains somewhere in the middle. Markets have taken the hint, reducing the odds of a December cut from 90% to below 70%, a shift that’s helped underpin the dollar’s recovery. But with sentiment this finely balanced, a single soft data point could quickly tip the scales again. For what it is worth, I think the dollar recovery may be nearing its end.

 

EUR/USD forecast: Limited further downside risks for the euro

 

While the ECB isn’t exactly striking a hawkish pose, President Lagarde’s declaration that the central bank is “in a good place” suggests the easing cycle is effectively on pause. Combine that with improving Eurozone PMIs, a mildly upbeat GDP print, and stronger factory orders print out of Germany today and some would argue that the single currency is beginning to look undervalued at these levels against the US dollar. Indeed, Germany’s fiscal expansion plan adds another intriguing dimension. Berlin’s decision to break its self-imposed debt brake to fund nearly a trillion euros in infrastructure, defence, and green projects marks a seismic shift in policy. While the impact won’t be immediate, such spending could reshape medium-term growth prospects across the bloc, bolstering the euro as capital flows respond to improved investment potential.

 

EUR/USD technical forecast: Key support being tested

 

Technically, EUR/USD remains stuck in a well-defined bearish channel that began after peaking near 1.0920 in September. The August low at 1.1390 now represents a critical line in the sand. So long as that level holds, the pair avoids confirming a deeper downtrend.

 

 

The zone between 1.1460 and 1.1500 on the EUR/USD chart deserves special attention—it’s been a reactive support band, and any sign of a sustained rebound here could set the stage for a tactical recovery. That said, the market is yet to flash a convincing bullish signal. A breakout from the descending channel would be the technical cue many traders are waiting for.

 

From where I stand, the downside seems limited unless the Fed turns unexpectedly hawkish again. Fundamentally, the euro’s backdrop is quietly improving, while the dollar’s momentum rests on increasingly fragile ground. If US data wobbles, the EUR/USD forecast could shift swiftly from defensive to opportunistic, with the 1.16–1.17 region the next logical upside target.

 

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R