USD gains ahead of ADP figures

On Wednesday, the US Dollar Index (DXY) pushes higher in an attempt to extend the breakout of the 94.00 level. After a bounce from the lows of Monday at 93.67, the price continued to rise as the moderate increase in US yields buoyed the price higher. The dollar might gain some strength due to the cautious sentiment ahead of ADP's Employment Change figures. While concerns about the debt limit and tapering by the Fed persist, investors are awaiting remarks from the Fed.

DXY buyers keep the ground above 94

In the weekly chart, the dollar index has completed its double bottom reversal pattern. It is now rising for the fifth consecutive week, which is also the 38.2% Fibonacci retracement level corresponding to the top of the Kumo cloud. Crossing this area could be crucial for the dollar to continue to rise against other currencies.

All are against Euro

A strong dollar has pushed the euro-dollar pair below the level of 1.16 this week. During the last week, sellers completed a rebound at the neckline of the head and shoulders pattern, setting the stage for further losses. As the pair reached 1.15815 this week, it now appears to be heading towards the classic pattern projection of 1.13410.

The euro's slide has also been exacerbated by the energy crisis in Europe and rising inflation across the bloc.

Add to the odds, data showed today that retail sales in the eurozone were weaker than expected in August as consumers reined in spending on food, drinks and tobacco.

Despite expectations of a 0.8% month-over-month increase and a 0.4% year-over-year rebound, Eurostat reported that retail sales increased only 0.3% in August and were unchanged from a year earlier.

Events of the day

Today later, EIA will release its weekly inventory flow data at 17:30 EEST. US stockpiles are expected to have increased by 795,800 barrels last week. Data from the API published yesterday showed a significant rise of one million barrels. Crude oil prices may struggle if the API report proves to be confirmed by the EIA report today.

Employment data from ADP is also due today. It is seen showing an increase of 430k in payrolls in September, which suggests a positive development in Friday's official figures. Nevertheless, the PMI survey warns that labour shortages led to "historically subdued" employment growth last month.

A lower-than-expected number could hurt crude oil demand expectations. Although losses may be limited if the miss is so dramatic that it gives rise to the hope that the Fed's policy normalization may be delayed. There is widespread expectation that the central bank will begin winding back stimulus before the year's end.