(eToro Blog) Automatic Data Processing today reported that private sector jobs increased by 179,000 in April. That was well off the 200,000 new jobs that a consensus of economists' had earlier forecast and, worse, a significant decline of 22,000 jobs from March's 201,000 newly created positions.Later this week, the U.S. Labor Department will also be releasing their non-farms payroll report which tends to mimic the track of the ADP report over the long run.

The U.S. Federal Reserve, which recently lowered its growth outlook, is mandated by law to ensure price stability and a robust employment sector. Some would argue that the current ultra-loose policy is ineffective, in spite of the historically low interest rate and the nearly-concluded $600 billion bond purchase program.

The central bank is in a difficult position, however. It is faced with inflationary pressures which would, under "normal" circumstances, warrant an increase in interest rates. That, however, would likely have significant repercussions including dampening consumer confidence still further and putting additional pressure on the struggling U.S. housing market, neither of which the Fed would like to see happen.

The next meeting of the Federal Open Market Committee is scheduled to begin on June 21st at which time the members will need to make two key decisions. The first, whether to raise interest rates, should inflation be less transient than earlier believed and second, to initiate another round of quantitative easing once the current bond purchase schedule is concluded.

Most analysts concur that, in the case of the former, a rate hike is highly unlikely. In the case of the latter, however, no clear economists' consensus has yet been determined, but Chairman Bernanke's most recent press conference suggests that that is a strong possibility.

The U.S. Dollar's recent rally appears to have ended, and on the eToro trading floor, traders of EUR/USD favor selling by a ratio of 32 sellers to 5 buyers, and analysts' target of 1.50 appears within striking distance. Traders of GBP/USD are bullish in favor of buying by a 6 to 3 ratio, and analysts are still targeting 1.70.