US Dollar records mild gains as DXY jumps above 20-day SMA after soft ADP figures

• The DXY Index is witnessing mild gains, posing a threat to the 20-day SMA near 104.00.
• ADP Employment Change for November came in lower than expected; Unit Labor Costs were revised lower.
• US yields are declining, limiting the upside for the USD.

The US Dollar Index (DXY) is steadily rising, trading at 104.00 and treading close to the 20-day SMA despite softer Automatic Data Processing (ADP) jobs figures and consolidating its weekly gains. The focus is still on the Nonfarm Payrolls report, as investors will get a clearer picture of the labor market to continue placing their bets on the next Federal Reserve (Fed) decisions.

Mixed labor market data and cooling inflation signal a potentially dovish stance by the Fed, yet officials are not ruling out further tightening. This conjecture suggests a cautious but flexible approach to their monetary policy, so the incoming data is closely watched. Upcoming labor market data on Friday will play an integral role in shaping expectations for the Fed's decisions, which could have an impact on US Dollar price dynamics.

Daily Market Movers: US Dollar holds its ground despite soft labor market figures

• The US Dollar is trading with gains, pushing above the 20-day SMA at 104.00.
• The Unit Labour Costs for Q3 was revised to -1.2%, while November's ADP Employment Change came in lower than expected at 103K, falling short of the 130K estimate. 
• Investors await key economic reports due on Friday. Nonfarm Payrolls,Unemployment Rate and Average Hourly Earnings for November will be closely monitored.
• US bond yields are declining. The 2, 5, and 10-year bonds are seen at 4.59%, 4.11%, and 4.11%, respectively, limiting the upward strength of the USD.
• Market expectations are leaning toward a no-hike decision at the December Fed meeting while also projecting potential rate cuts by mid-2024, according to the CME FedWatch Tool.

Technical Analysis: US Dollar shows bullish resilience and pushes above the 20-day SMA

The Relative Strength Index (RSI) shows a favorable bias, existing with a positive slope despite being in negative territory. This buying momentum is bolstered further by the Moving Average Convergence Divergence (MACD), which exhibits rising green bars.

That being said, the index has yet to consolidate above the 20-day Simple Moving Average (SMA) and resides below the 100-day Simple Moving Average (SMA), indicating strong selling forces are at play. However, the bulls dominate the broader time horizon as the asset operates above the 200-day SMA.

Support levels: 104.00 (20-day SMA),103.60, 103.30, 103.15
Resistance levels: 104.10, 104.40 (100-day SMA), 104.50.