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• US Dollar saw severe selling pressure after soft ADP figures from June.
• Markets boosted their bets for September Fed rate cut.
• Keen market focus remains on the upcoming FOMC minutes from the June meeting.

On Wednesday, the US Dollar, represented by the Dollar Index (DXY), declined to its lowest level since June 18 at around 105.20 following the release of robust ADP labor market data. In addition, market participants eagerly anticipate the Meeting Minutes from the June Federal Open Market Committee (FOMC) event, which might influence interest rate expectations.

Signs of disinflation and a cooling labor market are becoming evident in the US economy, thereby fuelling belief in a rate cut possibly occurring in September. Federal Reserve (Fed) officials, however, exhibit restraint and maintain their data-dependent stance.

Daily digest market movers: US Dollar loses ground following robust ADP data, markets await FOMC Minutes
 

• Private sector employment in the US reported by ADP reflected a decline with a rise of 150K in June, contrasted against a revised number of 160K expected.
• Later this week, the highlight resides with the June Nonfarm Payrolls data due on Friday. Bloomberg consensus predicts a drop to 190k from 272k in May, yet whisper numbers currently point to 198k.
• Session late Wednesday will see another critical event with the impending release of the FOMC June Meeting Minutes.
• The market perceives a 70% likelihood of a September rate cut.

DXY technical outlook: Bulls give up and lose 20-day SMA
 

On Wednesday, the outlook for the DXY turned negative in the short term with both the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) now on negative terrain.

The highlight is that the bulls lost their position above the 20-day Simple Moving Averages (SMAs). The market should monitor potential fallbacks toward the 105.00 and 104.50 zones. On the upside, the former support of the 20-day SMA at 105.40 is now a resistance line.

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