The U.S. dollar retraced early gains against the yen and the franc on Wednesday's European deals, as U.S. private sector employment growth slowed more than expected in February. Markets now gear up for key U.S. jobs data on Friday, to assess improvement in labour.

Payroll processor ADP released a report showing that the pace of U.S. private sector job growth showed a notable slowdown in February compared to the previous month.

Employment increased by 212,000 jobs last month, below January's revised gain to 250,000, the data showed. This is down from the expected increase of about 220,000 jobs for the month.

The ADP figures are considered a key prelude to the official U.S. jobs report, which comes out Friday morning from the Labor Department.

These reports serve as guide to the Federal Reserve regarding the state of the U.S. labor market, which it will use to consider the timing of rate hike.

Uncomfortably low inflation and uncertain global environment poses significant risks to premature rate hike, Federal Reserve Bank of Chicago President Charles Evans said at an event in Lake Forest, Ill.

"We should be patient in raising interest rates," Evans said, adding that "I think economic conditions will evolve in a way such that it will be appropriate to delay normalizing monetary policy-that is, to hold off on raising short-term rates-until 2016."

Having advanced to a 1-1/2-month high of 0.9634 against the franc in early deals, the greenback eased to 0.9598. The next possible downside target for the greenback-franc pair is seen around the 0.94 mark.

The greenback pared gains to 119.47 against the Japanese yen, from an early high of 119.82. If the greenback-yen pair continues slide, 118.00 is seen as its next support level.

The greenback firmed to 1.1104 against the euro, a level not seen since September 2003. The next possible resistance for the greenback may be located near the 1.10 region.

The greenback climbed to a multi-week high of 1.5309 against the pound, compared to Tuesday's closing value of 1.5344. Next key resistance for greenback is likely seen around the 1.52 mark.

Looking ahead, U.S. ISM non-manufacturing composite index for February and Fed's Beige book report are due shortly.

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