EUR/USD subdued as strong ISM and ADP data reinforce Fed's cautious stance

• The Euro remains subdued near three-month lows as upbeat US data lifts the Greenback.
• The US Dollar Index climbs to 100.30, its strongest level in over five months.
• Expectations for a December Fed cut have eased, with futures now implying a 62% likelihood amid firmer US data.

The Euro (EUR) holds firm against the US Dollar (USD) on Wednesday but remains anchored near three-month lows, as the Greenback stays broadly supported by upbeat US economic data.

At the time of writing, EUR/USD is little changed around 1.1477, showing limited reaction despite a busy US economic calendar. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major peers, is trading around 100.30, its highest level since May 29.

The latest ADP Employment Change report showed that US private payrolls rose by 42,000 in October, exceeding market expectations of a modest 25,000 gain and reversing the 32,000 decline reported in September.

Separately, the ISM Services Purchasing Managers Index (PMI) rebounded sharply to 52.4 in October from 50.0 in September, signaling a return to expansion in the services sector for the eighth time this year. The report highlighted stronger Business Activity (54.3) and New Orders (56.2), while Prices Paid surged to 70.0, its highest level in three years. However, the Employment Index remained in contraction at 48.2, indicating some softness in hiring.

Earlier in the day, the S&P Global US Services PMI rose to 54.8 in October from 54.2 in September, marking the thirty-third straight month of expansion in the sector. The report pointed to solid demand growth and steady job creation, although confidence slipped to a six-month low amid uncertainty around tariffs and government policy. The data suggest that the US economy entered the fourth quarter with strong momentum, consistent with GDP rising at an annualized pace of about 2.5%, according to S&P Global Chief Economist Chris Williamson.

The combination of resilient services activity and steady job creation has strengthened the case for the Federal Reserve (Fed) to maintain a cautious stance following last week's 25-basis-point (bps) reduction. According to the CME FedWatch Tool, traders now assign a 62% probability of a rate cut in December, down from 71% earlier in the day and 94% a week ago.