The Dollar was set to rise for a third consecutive day on Thursday, although mixed US economic data kept investors cautious ahead of Friday’s nonfarm payrolls release.
Thursday’s figures indicated that the US labour market remained in a “no hire, no fire” phase, as job openings dropped more than anticipated in November and hiring activity slowed.
However, services sector activity unexpectedly strengthened in December, indicating that the US economy closed 2025 on a relatively solid note, Reuters reports.
The Dollar index, which tracks the US currency against six major peers, rose 0.08% to 98.807, marking its third consecutive gain.
The greenback is recovering from its weakest annual performance since 2017, yet analysts forecast another year of potential weakness.
The US economy still appears strong. Much of the short-dollar positioning has already been taken, which analysts believe will limit how much further the Dollar can weaken going forward. Some emerging market currencies could outperform, potentially gaining more than the Euro or the Yen.
Traders are anticipating at least two interest-rate cuts from the Federal Reserve this year, even though the central bank’s December guidance suggested only one cut in 2026.
The Fed is expected to keep rates unchanged at its upcoming meeting.
Meanwhile, markets have largely ignored geopolitical tensions, such as the US intervention in Venezuela, and are focusing instead on economic data.
However, the Dollar could come under pressure if risks re-emerge from the possibility that the US Supreme Court rules this week that President Donald Trump’s administration exceeded its authority on import-related duties.
Elsewhere, in regard to the Euro, recent inflation data pushed the single currency lower and dragged German Bund yields to a one-month low.
The Euro fell 0.05% to $1.1670 on Thursday, following a 0.45% decline over the previous two sessions.
“The market’s debate has tentatively shifted towards the possibility of a (European Central Bank rate) hike a year from now,” said Stefan Koopman, senior macro strategist at Rabobank.
“With headline inflation back at target and core edging lower, it remains difficult to justify pricing an imminent tightening cycle.”