• US Dollar holds steady against its major rivals this-week.
• US Dollar Index fluctuates in a narrow channel near 104.00 for the third straight day.
• US inflation report and Fed's policy meeting next week could ramp up US Dollar's volatility.

The US Dollar (USD) stays relatively stable on Wednesday as investors refrain from committing to large positions ahead of next week's highly-anticipated data releases and central bank policy announcements. The US Dollar Index, which gauges the USD's valuation against a basket of six major currencies, fluctuate in a tight channel near 104.00 for the third straight day.

May Consumer Price Index (CPI) data from the United States (US) will be watched closely by market participants on Tuesday before the Federal Reserve (Fed) announces the interest rate decision on Wednesday. The Fed will also publish the revised Summary of Projections, the so-called dot plot.

Daily digest market movers: US Dollar struggles to find direction

• In its latest outlook published on Wednesday, the OECD said that it sees the Fed funds rate peaking at 5.25%-5.5% from Q2 2023, followed by two "modest" cuts in the second half of 2024.
• The US Census Bureau will publish April Goods Trade Balance later in the day. The US economic docket will also feature Consumer Credit Change.
• The monthly data published by the ISM showed on Monday that the business activity in the US service sector continued to expand in May, albeit at a softer pace than it did in April. The ISM Services PMI declined to 50.3 in May from 51.9 in April and missed the market expectation of 51.5.  
• Further details of the ISM PMI report revealed that the Prices Paid Index edged lower to 56.2 from 59.6 and the Employment Index dropped to 49.2 from 50.8.
• US stock index futures trade flat in the European session. On Tuesday, Wall Street's main indexes closed virtually unchanged, reflecting the cautious market mood.
• Commenting on the data, "there has been a pullback in the rate of growth for the services sector," noted Anthony Nieves, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee. "This is due mostly to the decrease in employment and continued improvements in delivery times (resulting in a decrease in the Supplier Deliveries Index) and capacity, which are in many ways a product of sluggish demand."
• The US Census Bureau announced on Monday that Factory Orders rose 0.4% in April following the 0.9% increase recorded in March.  
• According to the CME Group FedWatch Tool, markets are pricing in a more than 70% probability of the Fed leaving its policy rate unchanged at the upcoming meeting.
• The monthly data published by the US Bureau of Labor Statistics (BLS) showed on Friday that Nonfarm Payrolls rose 339,000 in May. This reading surpassed the market expectation of 190,000 by a wide margin. April's reading of 253,000 also got revised higher to 294,000. 
• Underlying details of the labor market report revealed that the Unemployment Rate climbed to 3.7% from 3.4% in the same period. The Labor Force Participation rate remained unchanged at 62.6%, while annual wage inflation, as measured by the change in Average Hourly Earnings, edged lower to 4.3% from 4.4%.
• "There's likely enough pockets of softness in this report for the FOMC to pass on raising rates at the next meeting, though another strong payrolls gain in June, coupled with another disappointing inflation report, could set the stage for a rate increase in July," economists at the Bank of Montreal said regarding the potential impact of the labor data on the Fed's policy outlook