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US Dollar Softens Ahead of Fed Testimony, ECB Decision

The US Dollar (USD) weakens on Wednesday as mixed job market data and Fed Chair Jerome Powell’s testimony fueled market uncertainty. Powell hinted at rate cuts but emphasized the need for sustained inflation control.

ADP and JOLTS data signal a tighter labor market, potentially influencing the Fed’s decision timeline. Focus shifts to Thursday’s European Central Bank (ECB) rate decision, where traders will seek further clues on the Fed’s potential rate cut timing.

Technically, the US Dollar Index (DXY) faces pressure at its crucial 200-day SMA support (103.73). Some traders appear to be pre-positioning for potential USD strength, creating possible risks.

  • 100-day SMA (103.88): A decisive close above this level could signal an upward move, targeting 104.60, 105.88, and potentially 107.20.
  • 200-day SMA (103.73): Strong support level. A break below could lead to a decline towards 103.22 (55-day SMA) and 103.00.