Forex Today: US Dollar clings to recovery gains as focus remains on US data, Fedspeak

Here is what you need to know on Wednesday, October 2:

The US Dollar (USD) continued to gather strength against its rivals following Monday's bullish action, with the USD Index climbing to its highest level in nearly two weeks above 101.00 on Tuesday. The European Commission will release the Unemployment Rate data for August during the European trading hours. Later in the day, the ADP Employment Change data for September will be featured in the US economic docket. Investors will also scrutinize comments from Federal Reserve (Fed) officials, including Fed Governor Michelle Bowman and Richmond Fed President Thomas Barkin.

The data published by the US Bureau of Labor Statistics showed on Tuesday that JOLTS Job Openings climbed to 8.04 million in August from 7.71 million in July. On a negative note, the ISM Manufacturing PMI held steady at 47.2 in September, missing the market expectation of 47.5 and pointing to an ongoing contraction in the manufacturing sector's business activity. Following these data releases, Wall Street's main indexes turned south and the risk-averse atmosphere helped the USD outperform its rivals.

Meanwhile, escalating geopolitical tensions seem to be causing investors to adopt a cautious stance midweek. Iran has reportedly fired about 200 ballistic missiles on Israel and Israel has vowed to retaliate against the attack. Israel's Prime Minister Benjamin Netanyahu said that Iran had made a "big mistake" and "will pay," reviving fears over a deepening conflict in the Middle East. Reflecting the negative shift in market mood, US stock index futures were down between 0.3% and 0.4% at the time of press.

EUR/USD lost more than 0.5% on Tuesday and closed the third consecutive day in negative territory. At the time of press, the pair was trading in a tight range slightly above 1.1050.

GBP/USD declined sharply on Tuesday and touched its lowest level since September 19 below 1.3250. The pair holds steady in the European morning on Wednesday but trades below 1.3300. The Bank of England will release the minutes of the Financial Policy Committee (FPC) meeting and publish the FPC Statement later in the day.

After closing the day virtually unchanged on Tuesday, USD/JPY edges higher toward 144.00 in the European morning on Wednesday. The data from Japan showed earlier in the day that the Consumer Confidence Index improved slightly to 36.9 in September from 36.7 in August.

Gold benefited from escalating geopolitical tensions and gained more than 1% on Tuesday, despite the broad-based USD strength. XAU/USD struggles to build on Tuesday's gains and trades in negative territory near $2,650 on Wednesday.