US Dollar Pauses Ahead of Key Data

The US Dollar softened on Wednesday as mixed economic data emerged. While the ADP Employment Change report for September exceeded expectations, signaling robust job growth in the private sector, the downward revision to Q3 GDP growth tempered optimism. This conflicting data painted a nuanced picture of the US economy, leaving investors uncertain about the future trajectory of the greenback.

As investors digested this mixed data, their focus shifted to Friday’s Nonfarm Payrolls report, which is expected to provide a more comprehensive view of the labor market. A weaker-than-expected NFP report could exert further downward pressure on the US Dollar, as it may signal a slowdown in job growth and economic activity. This could lead to reduced expectations for future interest rate hikes by the Federal Reserve, making the Dollar less attractive to investors.

On the technical front, the US Dollar Index (DXY) is consolidating, potentially setting the stage for a retest of the 200-day Simple Moving Average (SMA) at 103.50. The Relative Strength Index (RSI) is declining but remains in overbought territory, while the Moving Average Convergence Divergence (MACD) is indicating waning momentum. Key support levels for the DXY are situated at 104.50, 104.30, and 104.00, while resistance is found at 104.70, 104.90, and 105.00.