On Wednesday, the US Dollar picked up steam for the second consecutive day as the US Dollar Index, which measures the currency against six key rivals, managed to rise despite remaining in the red for the week following Monday’s sharp decline. This resilience comes amidst a mix of economic data that's leaving investors on edge

Tuesday’s JOLTS Job Openings report for April revealed a dip, missing the mark with job listings at 8.06 million, falling short of the forecasted 8.34 million and the previous 8.35 million. Despite the lower numbers, a notable element was the continued upward pressure on wages, suggesting employers are still willing to hike pay, a factor that plays a crucial role in the inflation outlook.

The ADP employment report released today showed the US private sector added 152K jobs in May, with annual pay increasing by 5%. This figure, however, fell short of April’s revised gain of 188K and was below market expectations of 173K, leading to a muted market response.

The US Dollar Index (DXY) recently experienced a bearish breakout from a major ascending channel, indicating a shift in the trend. The current price action suggests a short-term rebound target around 104.60, as shown by the resistance level marked on the chart. The RSI indicator is hovering near oversold territory, suggesting limited immediate downside potential. If the index then fails to reclaim the 105 level, it might revisit the recent support zone around 104.18:

Investors are now eyeing the ISM report on the US services sector's economic activity, due later today. The ISM Services PMI, a key indicator for the sector that constitutes two-thirds of the economy, is anticipated to rebound to 50.5 from the previous 49.4, signaling a return to expansion. The underwhelming performance of the ISM Manufacturing PMI earlier this week was a significant factor behind Monday’s dollar slump.

Market participants will closely analyze subcomponents of the ISM Services PMI, including New Orders and Prices Paid Indexes, to gauge demand trends and input cost changes. Wage costs in the service sector remain a critical component driving persistent inflationary pressures.

Interest rate futures reveal a growing expectation for rate cuts, with markets pricing in a 65% chance of a rate decrease by September, a notable jump from 47% just a week ago.

All eyes are on Friday’s Nonfarm Payrolls (NFP) data for May, which will offer fresh insights into the labor market and its implications for future interest rate decisions.

Across the Atlantic, UK investors are keenly watching for signals on when the Bank of England might begin cutting rates. Current market sentiment anticipates two rate reductions this year, with the earliest move potentially coming at the August meeting.

The British Pound remains within Tuesday’s trading range, reflecting market uncertainty. This week, the UK economic calendar is sparse, lacking major events that could influence significant market movements.

From a technical perspective, the GBP/USD chart shows the currency pair has been moving within an ascending channel, remaining in a vulnerable position near the 1.28 level. This level aligns with the upper boundary of the channel and a downward-sloping trendline, suggesting a confluence of resistance. The recent price action suggests a possible pullback towards 1.27 as the RSI indicator nears overbought territory, indicating reduced bullish momentum: