The US Dollar made modest gains on Wednesday, buoyed by political turbulence in Europe and cautious positioning ahead of key US economic indicators. As traders digest the potential fallout from France's looming no-confidence vote, the greenback is finding support amid a recalibration of risk appetites.

The latest ADP figures showed that private sector employment climbed by 146K in November, just shy of the 150K. The muted reaction in currency pairs suggests that the data hasn't thrown a wrench in traders' expectations. The DXY index remains perched above a key bullish trendline that's been in play since early November, indicating the rally hasn't run out of steam and a retest of recent peaks could be on the horizon:

On the economic docket, attention turns to the ISM’s upcoming release, which will shed light on the health of the US services sector. Market consensus anticipates a slight dip in the headline PMI to 55.5 from 56. Meanwhile, S&P Global is set to unveil its final November readings for the PMI. Expectations are for the services index to hold steady at 57, with the composite PMI anchoring at 55.3.

Investors are also zeroing in on Federal Reserve Chair Jerome Powell's speech at the New York Times DealBook Summit. His comments could offer fresh clues on the trajectory of interest rates. According to the interest rate futures, there's a 74% probability that the Fed will cut rates by 25 basis points to a range of 4.25%-4.50%, while the remaining odds favor leaving rates untouched. Recent Fed minutes and dovish remarks from several officials have tilted the scales toward easing, influencing yield curves and correlation dynamics across asset classes.

Technical picture of EURUSD on daily timeframe suggests that price continues to gravitate towards the horizontal support at 1.0450 (October 2023 low) after several recovery attempts with a possible breakout especially if the NFP data surprises on the upside:

The Pound Sterling has given up some ground after Bank of England Governor Andrew Bailey signaled the possibility of four interest-rate cuts in 2025 during an interview with the Financial Times. Bailey emphasized the need for a gradual approach to lowering rates and stressed that more work is needed to bring inflation to heel, even though the "disinflation process is well embedded." Market expectations for the BoE to stand pat are being propped up by persistent inflation concerns. October's inflation report revealed that the annual core Consumer Price Index—which strips out volatile items—accelerated to 3.3%, while services inflation ticked up to 5%.

GBPUSD daily chart also indicates growing weakness as rebound above the key trendline failed to gain traction and the price keeps pressing the trendline increasing chances that market will revisit recent lows at 1.25: