USD braces for volatility as NFP looms amid Fed rate cut aftermath

USD faces heightened volatility ahead of today's Non-Farm Payrolls release, following last week's 25 basis point Fed rate cut that brought the federal funds rate to 4.25%-4.50%. The dollar index has shown mixed performance, consolidating near 106.50 as markets digest the Fed's final policy move of 2024. Speculation around Kevin Warsh potentially replacing Jerome Powell as Fed Chair adds another layer of uncertainty to dollar positioning. Market consensus expects NFP to show 200K job additions for November, with unemployment rate holding at 4.1%. Any significant deviation could trigger sharp moves across major USD pairs, particularly EUR/USD trading near 1.0500 and USD/JPY hovering around 152.00. Strong employment data could support dollar recovery and validate the Fed's cautious approach to further easing, while disappointing figures might accelerate bearish momentum as traders price in additional 2025 rate cuts.