The dollar index started Monday with a slight uptrend, trading at 79.958 up from 79.830 on Friday. The Dollar was help by renewed concerns over the global recovery. Still, uncertainty regarding market conditions, as well as the direction of the Dollar, is likely to continue dominating this week as well; with the USD trading in a narrow range with its major currency counterparts.
However, high volatility is expected on Wednesday and Thursday as there are several major news releases ahead of the July 4th weekend. Thursday is expected to be particularly interesting with the release of the European Central Bank�s (ECB) policy statement at the same time as the U.S. June payrolls report. The employment data are the most closely watched reports that guide market expectations regarding U.S economic recovery, while diminishing green shoots in the Euro-Zone put great focus on Central Bank policy.
With last week�s mild statement from the FOMC failing to give the market a clear direction, uncertainty is still the driving force in trading. Better than expected economic data from the U.S no longer automatically pushes investors to riskier currencies; therefore, positive economic data from the US might actually be beneficial for the Dollar. It will be important to follow the ECB statement, as any direction the Dollar might take based on the news will be intensified by the statement.