The US dollar index maintained its steady pace after the release of important economic data that missed market expectations and changed the Fed's confidence in the upcoming rate meeting.
At 9.20 am, the US Dollar Index (DXY) was at 96.777 points, down 0.12% since it opened in early trading on Wednesday in the Asian session.
The January Federal Open Market Committee (FOMC) meeting provided a clearer picture of the Federal Reserve's (Fed) assessment of the US labor market.
The Fed saw the labor market as stabilizing rather than showing signs of significant deterioration.
This assessment prompted the FOMC to no longer consider the employment sector as the main downside risk to economic growth, thus reducing the urgency for monetary policy easing.
As a result, the Fed kept interest rates at 3.50% to 3.75%.
However, market expectations differed as the probability of a rate cut at the March 18 meeting was estimated at around 82%. Investors assessed the labor market as still fragile and continued to focus on the January jobs report as a key indicator of the Fed's policy direction.
Market projections expected an increase of between 55,000 and 70,000 new jobs in January, up from 50,000 in the previous month, while the unemployment rate was forecast to remain stable.
A stronger-than-expected report could potentially reduce the probability of a rate cut, thus supporting the strengthening of the US dollar.
Conversely, if the jobs data fails to meet expectations, market concerns are expected to increase, which could strengthen the prospect of monetary policy easing on March 18 and put pressure on the performance of the US dollar.
