2021.05.0408:39:00UTC+00U.S. Dollar Higher On Fed Optimism

The U.S. dollar gained ground against its major rivals on Tuesday, after Federal Reserve Chairman Jerome Powell said that U.S. economic outlook has clearly brightened amid faster vaccination rates and fiscal stimulus, but cautioned that the economy is "not out of the woods yet."

"While the recovery is gathering strength, it has been slower for those in lower-paid jobs," Powell said at a National Community Reinvestment Coalition event on Monday.

The central bank is focused on these longstanding disparities as they weigh on the productive capacity of the economy, he added.

New York Fed President John Williams noted that current conditions are "not nearly enough" for a shift in the monetary policy stance.

Investors await upcoming economic data to assess the strength of the rebound in the economy.

Today's U.S. economic docket features trade data and factory orders.

Other data that will be released in the week include ADP private sector payrolls on Wednesday, weekly jobless data on Thursday and nonfarm payrolls data on Friday.

Economists expect that nonfarm payrolls grew by 978,000 jobs in April, up from March's gain of 916,000 jobs.

The greenback rose to 109.49 against the yen and 1.3851 against the pound, off its early lows of 109.01 and 1.3912, respectively. The next possible resistance for the greenback is seen around 112.00 against the yen and 1.37 against the pound.

The greenback advanced to a 6-day high of 0.9156 against the franc and near a 2-week high of 1.2007 against the euro, up from its early lows of 0.9097 and 1.2064, respectively. If the greenback rises further, it may find resistance around 0.94 against the franc and 1.18 against the euro.

The greenback edged up to 1.2317 against the loonie and 0.7712 against the aussie, reversing from its prior lows of 1.2273 and 0.7763, respectively. The greenback is poised to target resistance around 1.25 against the loonie and 0.75 against the aussie.

The U.S. currency touched a fresh 2-week high of 0.7144 against the kiwi, coming off from its previous low of 0.7204. On the upside, 0.70 is possibly seen as its next resistance level.

Looking ahead, U.K. manufacturing PMI for April and mortgage approvals data for March will be released in the European session.

U.S. and Canadian trade data, Canada building permits and U.S. factory orders, all for March, are set for release in the New York session.