The U.S. dollar index (DXY) inched up 0.25% to close at 97.24 on Tuesday, as the currency market was looking for a clue on further action from European Central Bank (ECB) President Mario Draghi, who was due to give a speech on cultural issues in Frankfurt at 19:30 CET, but could possibly comment on monetary policy on the sidelines. Last Thursday, Mr. Draghi told the media at the press conference after the ECB Governing Council meeting in Malta that the bank will re-examine whether to extend its 1.1 trillion euro bond-buying program at its December 3 meeting as he sees downside risks to growth and the inflation outlook.

The U.S. dollar index pulled back on Monday after Mr. Draghi and ECB top policy maker, Ewald Nowotny, president of the National Bank of Austria, seemed to be less dovish during a newspaper interview over the weekend. According to Reuters, during the interview, which was published on Monday, Mr. Nowotny said while the ECB is right to consider adding to its bond buying to boost inflation, it should think very carefully before doing so. 

The DXY has been on the rise since mid-October and surged to an intraday high of 97.89 last Wednesday, after the U.S. Federal Reserve decided to keep rates on hold on Wednesday after a two-day FOMC meeting. The Fed issued a somewhat hawkish policy statement, hinting of a rate hike at the next FOMC meeting on December 15-16. From the statement, the Fed seems to be determined to hike the rate this year even though they admit that the pace of job gains has slowed. 

Since then, the index has pulled back after a mixed bag of U.S. economic data and the latest comments from ECB top officials. The Bureau of Economic Analysis (BEA), the U.S. Department of Commerce, said on Thursday that the advance estimate U.S. gross domestic product (GDP) increased at an annual rate of 1.5% in the third-quarter of 2015, missing the 1.6% median projection in a Bloomberg survey of 80 economists. On Friday, the U.S. Department of Commerce reported that personal spending rose just 0.1% in September from a month earlier, the slowest pace since January, missing The Wall Street Journal’s forecast of 0.2% growth.

The Institute for Supply Management (ISM) announced on Monday that its index for the U.S. manufacturing sector fell to 50.1 in October, just a tad above expectations of 50.0, meaning that the sector has barely expanded. The manufacturing employment component of the index, however, contracted last month as it fell to 47.6, its lowest level since August 2009. Expectations were for 50.1. That was no surprise as oil services layoffs are continuing to pile up. 

The federal funds futures, traded on the Chicago Mercantile Exchange and commonly used to estimate the market’s views on the likelihood of changes in U.S. monetary policy, indicate 47.7% odds for a quarter-point rate hike at the December 16 policy meeting, according to data from the CME Group as of November 3. 

The odds for a rate hike could dramatically change one way or the other, after the release of the U.S. nonfarm payrolls report for October by the Labor Department on Friday, November 6. Wall Street economists' expectations are for a 177,000 gain in payrolls with the unemployment rate remaining at 5.1%. If the jobs report comes in below expectations again, it will be the fifth-straight month of a miss.

Technically, the DXY has been trading in a narrow symmetrical triangle band between the 98.14 and 93.39 levels. The index could break out the trading range if the nonfarm payrolls report exceeds Wall Street economists' expectations, or else fall back to retest the lower trendline support of the trading band. The DXY could continue moving in this trading range until the currency market sees real action from the central banks.