US Dollar sits comfortably above 97, focus shifts to NFP

On the back of solid data from the United States, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, recovered some of its losses from the previous session on Thursday and advanced above the 97 handle. The index has been spending the second half of the NA session in a tight range near its session high amid a lack of fresh catalysts. As of writing, the index was at 97.17, up 0.27% on the day.

• Forex today: dollar catches a bid, Trump dumps Paris accord, nonfarm payrolls next catalyst

Earlier in the session, the ADP National Employment Report revealed that private payrolls increased by 253,000 jobs in May from 174,000 in April, beating markets' expectations for an increase of 185,000 jobs. According to another report from the U.S., The Institute for Supply Management (ISM) showed that the PMI remained virtually unchanged in May, the fact that the index remained above the 50 threshold suggested that the manufacturing sector, which accounts for 12% of the GDP, continued to expand.

• US ISM: Production, new orders and employment remain in growth mode - Wells Fargo

Although today's data point to a solid NFP report tomorrow, the market reaction could be disappointing as the last few releases, regardless of the divergence from the market consensus, were largely ignored by the participants. It is no surprise to investors that the labor market in the U.S. is in good shape and it doesn't impact the monetary policy decision of Fed in near-term.

• Nonfarm Payrolls Preview: get ready to be disappointed. Again
• CME Group FedWatch essentially confirms June rate hike

Technical outlook

On the upside, the index could encounter the first resistance at 97.50 (May 26 high) ahead of 98 (May 18 high/psychological level) and 98.75 (May 16 high). On the flip side, supports are located at 96.80/70 (May 31/23 low), 95.90 (Nov. 11 low) and 95 (psychological level).