US Dollar Picks Up Momentum Ahead of Key Macro Events: What to Watch Out for

investing.com:

The EUR/USD faces a key test in the next week and a half. We will have lots of key data and rate decisions from both the Federal Reserve and European Central Bank to come during this period. Ahead of these big events, the EUR/USD was down for the second consecutive week, eating into the impressive gains made last month. But will it bottom around the 1.0700-1.0750 key support area?

So far this week, the US Dollar Index was holding into the positive territory, driven primarily by a weaker EUR/USD exchange rate, which was down for the second consecutive week at the time of writing, albeit off its lows. The DXY has also been underpinned by weakness in other major currencies this week, including the GBP, JPY and CAD, among others.

The US dollar was left largely unscathed following Tuesday’s conflicting US data releases. October's unexpected drop in JOLTS job openings further fuelled speculation of future Fed rate cuts, but the more up-to-date ISM services PMI data in November, which was stronger than expected, provided a counter move.

Wednesday’s release of ADP data was a potential source of volatility for the dollar. Needless to say, it didn’t react much to the smaller-than-expected rise in ADP private payrolls (103K vs. 130K expected). ADP tends to lack predictive power as it has proven to be a poor indicator of the official jobs report that usually comes out two days after, although markets do occasionally react to out-of-consensus numbers.

Heading into the busier second half of the week for US data, the dollar thus remained supported, as investors were taking a less aggressive stance in foreign currencies given mixed signals about the US economy.

As there will be no further updates from Federal Reserve officials until the