There’s expected to be few drivers for the US dollar this week, with investors likely to shrug off data releases and the FOMC minutes ahead of the Thanksgiving holiday, with the focus firmly on the tax plan, which is facing a crucial vote in the Senate.

The US Census Bureau will publish its monthly advance report on manufacturers’ shipments, inventories and orders on Wednesday – a closely watched gauge of industrial activity that is seen as a good indication of future factory output. Orders of durable goods are expected to rise by 0.3% month-on-month in October, easing from a 2% surge in September. However, the data is not expected to see much of a reaction in forex markets as it is unlikely to alter the outlook for the US economy in the run up to the December FOMC meeting.

A rate hike by the Fed at its December 12-13 meeting appears to be a foregone conclusion, with market-implied odds of a 25-bps rate hike now running over 90% and several Fed officials signalling such a move in recent public remarks. Further indication of Fed action next month will likely come from the minutes of the October 31-November 1 meeting, which are published on Wednesday. The Fed will probably signal in the minutes that further tightening would be appropriate soon – in what would be the third rate increase this year.

A bigger concern for investors though in the near term is the fate of the US tax plan in the Senate. The tax bill passed its first major hurdle when it was approved by the House of Representatives last week. However, the Republicans have a much smaller majority in the Senate and could lose the vote if three or more Senators object to it. The Senate’s version of the tax bill differs widely from the House version and is proving unpopular among some Senate Republicans.

A vote on the Senate’s version of the tax legislation is not expected to come until the week after the Thanksgiving holiday at the earliest. The dollar could struggle to find upside momentum before then. It has already retreated sharply from the 8-month high of 114.72 yen set earlier this month as investors await Congress to give the tax reforms the green light before making fresh bets on the dollar.

With the near-term risk for dollar/yen tilted to the downside, immediate support should come from the 200-day moving average around 111.75, just below today’s one-month low of 111.87. A breach of the 200-day moving average could see the next key support being formed around the 111 level.

Trade Forex, Commodities, Stocks and more, trade CFDs on the Plus 500 CFD trading platform! *CFD Service. 80.6% lose money - Register a real money account here and get trading right away.