Forex – Dollar steady above multi-month lows before jobs data

The dollar was holding steady above multi-month lows against the yen and the euro on Wednesday after reversing losses in the previous session, as investors looked ahead to data on U.S. job creation.

USD/JPY rose 0.23% to 106.86, off Tuesday’s lows of 105.54, the weakest level since October 2014.

The dollar regained ground as investors locked in profits ahead of Friday’s U.S. nonfarm payrolls report for April, which many investors believe offers the clearest view of how the economy is performing.

The U.S. was to release the ADP report on private sector jobs growth and industry data on service sector activity later Wednesday.

The dollar has come under heavy selling pressure in recent sessions after the Federal Reserve left interest rates unchanged last week and indicated that it would stick to a cautious approach on future interest rate hikes.

Recent U.S. economic reports, including data on Monday showing that manufacturing activity dipped in April, reinforced expectations that interest rates will remain on hold for longer.

Higher rates tend to boost the dollar, as they make the greenback more attractive to yield-seeking investors.

A decision by the Bank of Japan last week not to implement additional monetary easing measures sent the yen surging higher, adding to pressure on the dollar.

EUR/USD was steady at 1.1491, pulling away from Tuesday’s highs of 1.1615, the highest level since August.

The Australian dollar rebounded after hitting a seven-week low overnight, with AUD/USD rising to 0.7510.

The Aussie ended the previous session down more than 2% after the Reserve Bank cut interest rates for the first time in over a year in response to slumping commodity prices.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 93.03.

The index had hit a low of 91.89 on Tuesday, the weakest level since January 2015.