**The USD Is Racing to the Upside in Early North American Trading**
*By Adam Button (Original author; credit to ForexLive and TradingView)*
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The United States dollar is on the move with a powerful surge to the upside in early North American trading. A combination of stronger-than-expected economic data, shifting sentiment about Federal Reserve monetary policy, and key technical levels at play has contributed to a strong bid for the greenback. In this in-depth article, we break down the key factors fueling the advance, examine critical chart points, and discuss what traders should watch next.
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## Strong Uptick in the Greenback
Early trading activity in North America saw the US dollar snapping higher across the major forex pairs. Traders witnessed the dollar racing to multi-week highs versus a basket of currencies, with particularly sharp gains against the Japanese yen, euro, and British pound.
### Key Observations
– **Dollar Index (DXY):** The US Dollar Index rallied decisively, breaking through resistance levels and putting in its largest single-session gain in nearly three weeks.
– **USD/JPY:** The pair surged past the psychologically important 160.00 level, setting off stop losses and drawing intervention speculation.
– **EUR/USD:** The euro slid well below 1.0700, with sellers in control after technical breaches.
– **GBP/USD:** Sterling was pressured back toward the 1.2600 handle as dollar strength asserted itself.
The catalyst for the move was a sequence of economic data surprises and renewed debate about how soon the Federal Reserve might cut rates this year.
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## Economic Data Surprises to the Upside
Market sentiment had already been shifting in the days leading up to this surge, with investors pricing in a slightly more optimistic view of the US economy. Today, that theme solidified with several key data releases that painted a resilient picture of American growth and employment strength.
### Summary of Data
– **ADP Private Payrolls:** Surpassed market expectations, signaling robust jobs growth in the private sector.
– **Weekly Jobless Claims:** Fell below consensus forecasts, underscoring the ongoing health of the labor market.
– **ISM Services PMI:** Came in stronger than expected, indicating continued expansion in the dominant services segment of the economy.
#### Data Breakdown (as reported):
– ADP payrolls: 150,000 vs. expected 130,000
– Weekly jobless claims: 218,000 vs. expected 235,000
– ISM Services PMI: 53.5 vs. expected 51.0
These three data points provided a one-two-three punch for the dollar, with traders reassessing previous expectations for near-term Fed easing.
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## Adjustments in Fed Rate Expectations
As recently as last week, traders had been pricing in as many as two 25-basis point cuts from the Federal Reserve before December. That narrative is now being called into question. With new signs of economic sturdiness, market participants are getting cautious about betting on early or aggressive rate cuts.
### Implications for the Fed
– The labor market is not softening at the pace previously anticipated.
– Economic activity, as reflected by ISM services, remains expansionary despite high rates.
– Inflation is still above target, and resilient data makes the case for the Fed to take a “wait and see” approach.
As a result, front-end Treasury yields moved higher, supporting the US dollar as carry trades became more attractive.
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## Technical Analysis: US Dollar Breaking Key Levels
The technical landscape for the greenback has also fueled today’s rapid advance. Chart watching traders pointed out several important levels being breached across multiple pairs.
### DXY (Dollar Index):
– *Support and resistance levels were marked at the 105.50, 106.00, and 106.50 zones.*
– The DXY pushed through resistance at 106.00, opening the door for a move to 106.50 and beyond.
– The
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