US Dollar Outlook: Traders focus on ADP employment report and PMI data, seeking clues about Fed interest rates.
2025-11-04 19:01:35
On Tuesday (November 4th) during the European session, the US dollar index traded within a range before rising and then falling back, fluctuating wildly between 99.68 and 100.03, indicating intense competition between bulls and bears. Overall, the day showed a clear pattern of "rise-fall-rebound," suggesting a weak short-term trend.
The dollar's strength continues to be driven by robust economic data and cautious comments from Federal Reserve officials, which have left investors uncertain about the timing of the next rate cut.
According to CME's FedWatch tool, federal funds futures traders currently expect a 65% probability of a Fed rate cut in December, compared to 94% a week ago.
Commerzbank currency analyst Michael Fister believes that given persistently high inflation, the most likely scenario remains a 25 basis point rate cut in December. The analyst stated, "Contrary to market expectations, we are not convinced that the likelihood of rate cuts over the next year has truly decreased after Powell's hawkish press conference last week; at the same time, we also doubt whether the recent strength of the dollar is truly justified."
ING analysts stated that recent comments from the Federal Reserve indicate a decline in confidence in the established easing path, implying a greater reliance on data. Tomorrow's ADP report could have a significant impact on the market, and the lack of broader data could lead to more directionless forex trading. Range-bound trading is likely to continue ahead of tomorrow's key ADP data release.
Monday Recap: Weak US Manufacturing Data
Yesterday's ISM Manufacturing PMI came in at 48.7, lower than the expected 49.4 and the previous reading of 49.1, indicating a contraction in the industrial sector. However, the ISM Manufacturing Price Index fell from 61.9 to 58.0, meaning that inflationary pressures persist even with slowing economic growth.
Meanwhile, Wards Total Vehicle Sales fell to 15.3 million vehicles, highlighting weakening consumer demand.
Tuesday Outlook: Central Bank Speeches and Optimism Index Data
Today's schedule includes several key speeches that could influence market direction. European Central Bank President Christine Lagarde is scheduled to speak twice, followed by speeches from Federal Open Market Committee (FOMC) members Bowman and Breeden, whose remarks may provide further clues about future policy shifts.
The US RCM/TIPP Economic Optimism Index forecast was 48.1, only slightly lower than the previous value of 48.3, indicating that consumer confidence was relatively weak.
ING analysts say the key Federal Reserve spokesperson to watch today is Michelle Bowman. She leans dovish and is a potential chair candidate—if she adopts a cautious tone in December, it could prompt a tougher repricing and support for the dollar.
Overall, the dollar's short-term strength appears solid. Traders are preparing for a busy midweek trading session, with the release of ADP employment data and the ISM non-manufacturing PMI, both of which could influence market expectations for the Fed's December decision.
Technical Analysis
(US Dollar Index 2-hour chart source: FX678)
The US Dollar Index (DXY) is consolidating around 99.89, having previously tested the resistance level of 100.03, and is currently taking a break. The price has consistently remained above the 50-period exponential moving average (50EMA, 99.55) and the 200-period exponential moving average (200EMA, 99.01), indicating a potential bullish structure.
The Relative Strength Index (RSI) is at 62, indicating neutral momentum, but the slight pullback suggests that demand is cooling after the recent rebound. Immediate support is around 99.41, and if the pullback deepens, the next support level at 99.14 may attract buyers back into the market.
If the price can clearly close above 100.05, it will open up space for testing the 100.35–100.63 range; while a break below 99.40 may shift short-term sentiment towards the 98.90 support level.
The dollar's strength continues to be driven by robust economic data and cautious comments from Federal Reserve officials, which have left investors uncertain about the timing of the next rate cut.
According to CME's FedWatch tool, federal funds futures traders currently expect a 65% probability of a Fed rate cut in December, compared to 94% a week ago.
Commerzbank currency analyst Michael Fister believes that given persistently high inflation, the most likely scenario remains a 25 basis point rate cut in December. The analyst stated, "Contrary to market expectations, we are not convinced that the likelihood of rate cuts over the next year has truly decreased after Powell's hawkish press conference last week; at the same time, we also doubt whether the recent strength of the dollar is truly justified."
ING analysts stated that recent comments from the Federal Reserve indicate a decline in confidence in the established easing path, implying a greater reliance on data. Tomorrow's ADP report could have a significant impact on the market, and the lack of broader data could lead to more directionless forex trading. Range-bound trading is likely to continue ahead of tomorrow's key ADP data release.
Monday Recap: Weak US Manufacturing Data
Yesterday's ISM Manufacturing PMI came in at 48.7, lower than the expected 49.4 and the previous reading of 49.1, indicating a contraction in the industrial sector. However, the ISM Manufacturing Price Index fell from 61.9 to 58.0, meaning that inflationary pressures persist even with slowing economic growth.
Meanwhile, Wards Total Vehicle Sales fell to 15.3 million vehicles, highlighting weakening consumer demand.
Tuesday Outlook: Central Bank Speeches and Optimism Index Data
Today's schedule includes several key speeches that could influence market direction. European Central Bank President Christine Lagarde is scheduled to speak twice, followed by speeches from Federal Open Market Committee (FOMC) members Bowman and Breeden, whose remarks may provide further clues about future policy shifts.
The US RCM/TIPP Economic Optimism Index forecast was 48.1, only slightly lower than the previous value of 48.3, indicating that consumer confidence was relatively weak.
ING analysts say the key Federal Reserve spokesperson to watch today is Michelle Bowman. She leans dovish and is a potential chair candidate—if she adopts a cautious tone in December, it could prompt a tougher repricing and support for the dollar.
Overall, the dollar's short-term strength appears solid. Traders are preparing for a busy midweek trading session, with the release of ADP employment data and the ISM non-manufacturing PMI, both of which could influence market expectations for the Fed's December decision.
Technical Analysis
(US Dollar Index 2-hour chart source: FX678)
The US Dollar Index (DXY) is consolidating around 99.89, having previously tested the resistance level of 100.03, and is currently taking a break. The price has consistently remained above the 50-period exponential moving average (50EMA, 99.55) and the 200-period exponential moving average (200EMA, 99.01), indicating a potential bullish structure.
The Relative Strength Index (RSI) is at 62, indicating neutral momentum, but the slight pullback suggests that demand is cooling after the recent rebound. Immediate support is around 99.41, and if the pullback deepens, the next support level at 99.14 may attract buyers back into the market.
If the price can clearly close above 100.05, it will open up space for testing the 100.35–100.63 range; while a break below 99.40 may shift short-term sentiment towards the 98.90 support level.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
