Following last week’s sharp decline, the US dollar has moved into a consolidation phase against most major currencies. At the same time, some instruments, including USD/JPY, are showing a modest recovery as markets await fresh macroeconomic signals. The session’s main catalyst is the preliminary ADP private-sector employment report, which economists expect to show job growth slowing to 68,000 from 98,000 in the previous month. If the data comes in below forecasts, pressure on the dollar could increase as markets price in a more dovish Federal Reserve stance. A stronger reading, by contrast, could support the US currency ahead of the official US labour market data release.

Attention will also turn to US services-sector activity indicators. Markets expect the preliminary S&P Global Services PMI to rise to 53.6, while the ISM Non-Manufacturing Index is forecast at 54.5. Strong results could partly offset any weakness in the ADP report and reinforce the resilience of the largest sector of the US economy. Market participants typically treat the ADP report as an early signal ahead of the official Nonfarm Payrolls release, even though the two reports do not always move in tandem. With several US data points due in close succession, today’s releases could help set near-term expectations for the labour market and broader growth backdrop until the official payrolls figures later this week.

USD/JPY

Last week, after the Federal Reserve meeting, USD/JPY fell sharply, losing more than 500 pips over several trading sessions. At the start of the current week, after testing the key support level at 155.30, buyers pushed the pair back toward 158.00. The move also formed a doji candlestick pattern, which may indicate that bearish momentum is weakening. If price breaks above yesterday’s high, the corrective move could extend toward 158.70–159.40. Weaker US employment data could trigger a renewed decline.

Key events for USD/JPY:

• Today at 15:15 (GMT+3): ADP change in US non-farm private employment
• Today at 16:45 (GMT+3): US Services PMI
• Tomorrow at 17:00 (GMT+3): US ISM Non-Manufacturing PMI

USD/CAD

Last week, USD/CAD retested the key support level near 1.4000 and then formed a bullish harami pattern after the rebound. Technical analysis suggests room for further recovery toward 1.4130–1.4170. However, weaker US data could lead to another test of the 1.4000 level.

Key events for USD/CAD:

• Today at 17:30 (GMT+3): US crude oil inventories
• Today at 23:05 (GMT+3): speech by Federal Reserve Governor Lisa D. Cook
• Tomorrow at 16:30 (GMT+3): Canada Services PMI

Today, the US dollar’s main drivers will be the preliminary ADP employment figures and US services-sector activity data, while commodity-linked flows may also stay in focus for USD/CAD around the crude oil inventory release. If the US releases confirm the resilience of the economy, USD/JPY and USD/CAD could continue recovering after the dollar’s recent correction. Weaker data could instead strengthen expectations of a more accommodative Federal Reserve policy, adding pressure on the US currency and leaving sellers in control for the near term. Investors are likely to reserve more definitive conclusions about the labour market until the official Nonfarm Payrolls report later this week.