Forex Top Team

Back to all insights

💹 USD at a Turning Point — Today’s ADP × ISM Will Decide the Trend

💹 USD at a Turning Point — Today’s ADP × ISM Will Decide the Trend

1. USD firmly in a downtrend

The Dollar Index (DXY) has broken below both the 10-day and 21-day MAs, confirming a clean shift into a bearish trend.

The move lower is driven by three pillars:

  • 85% probability of a December rate cut fully priced in

  • Soft U.S. data → rising concerns over growth slowdown

  • European PMI revisions upward → EUR and GBP outperforming

➡ The market’s base case is now “sell USD on rallies.”

2. Today’s core events: ADP + ISM Non-Manufacturing

Everything hinges on whether the two releases align.

Consensus

  • ADP: +10k (extremely weak)

  • ISM Non-Manufacturing: 52.0 (marginally softer)

➡ If both come in weak → USD downside accelerates sharply

Scenario Map

🔻 Weak ADP × Weak ISM

  • Rate-cut odds rise further

  • USD selling accelerates, DXY tests 99.00

  • USD/JPY drops toward 154.50–154.70

🔀 Weak ADP × Strong ISM

  • Choppy, directionless intraday swings

  • Broader USD downtrend remains intact

🔺 Strong ADP × Strong ISM

  • Short-term USD bounce (USD/JPY 156.20–156.50)

  • But still a sell-the-rally market

3. Europe: Services PMIs revised higher across the board

Germany, France, UK, and the Eurozone all saw upward revisions.

➡ Supports EUR and GBP
➡ Adds weight to the USD downtrend

If ISM prints weak, EUR/USD is the currency with the most upside potential.

4. Dollar Index: Pressing toward new lows

  • Asia: 99.29

  • Early London: 99.10, near the Dec 1 low

  • Consecutive breaks of the 10-day and 21-day MAs
    ➡ A textbook bearish trend

Current: DXY 99.14 (-0.22%)

5. USD/JPY: 155 area = “compression zone”

This week’s price action is shaped by contradicting forces:

  • BoJ December hike speculation → JPY buying

  • BTC crash → temporary risk-off / JPY buying

  • Later recovery → JPY selling via carry trades

These forces neutralize each other →
USD/JPY stuck in 155.00–156.00 for two days.

Add key options:

  • 155.00 = major puts

  • 156.00 = major calls

➡ This makes today the perfect setup for a range break.

6. USD/JPY Scenarios for Today (Most Important)

📉 Weak ADP × Weak ISM

  • Clean break below 155.00

  • Move toward 154.50

  • Trend shifts decisively toward JPY strength / USD weakness

🔀 Mixed readings

  • Choppy, indecisive price action

  • Range persists (155.00–156.00)

📈 Strong ADP × Strong ISM

  • Test of 156.20–156.50

  • But still a market where rallies are sold

7. Europe & UK Events

  • ECB’s Lane

  • ECB President Lagarde (hearing)

  • BOE’s Mann

➡ Supportive for EUR/GBP, but not main drivers today.

✔ Final Takeaway — Today’s data will define the trend for the entire week

  • Dollar Index → clear downtrend

  • European PMIs → support EUR & GBP upside

  • USD/JPY → sitting at the edge of a breakout zone (155–156)

👉 If ADP + ISM both print weak, USD will extend the downtrend aggressively
👉 If ISM comes in weak, the USD bearish trend accelerates immediately

More Insights