U.S. Dollar Advances Amid Omicron Uncertainty; GDP Data Due

The U.S. dollar climbed against its most major counterparts in the European session on Wednesday amid safe-haven demand, as the spread of the omicron variant of the coronavirus prompted more European countries to reimpose restrictions to halt the rate of infection.

Germany announced tighter restrictions after the Christmas holidays, limiting private gatherings to 10 people and a closure of night clubs.

Portugal ordered bars and nightclubs to close from December 26 and outdoor gatherings will be restricted to 10 people.

In the U.S., U.S. President Joe Biden pledged that the country will not go back to lockdowns, adding that it is Americans' "patriotic duty" to get vaccinated.

Investors await U.S. final GDP data for the third quarter due out at 8:30 am ET.

The Federal Reserve accelerated tapering of the asset purchase program last week and brought forward the timing of interest rate hikes to the first half of 2022.

The greenback edged higher to 1.1264 against the euro and 0.9253 against the franc, from Tuesday's close of 1.1285 and 0.9230, respectively. The greenback is seen finding resistance around 1.10 against the euro and 0.94 against the franc.

The greenback touched 114.33 against the yen for the first time since November 26. The pair had closed Tuesday's deals at 114.07. The greenback is likely to face resistance near the 116.00 region.

Minutes from the Bank of Japan's meeting on October 27 and 28 showed that members of the monetary policy board said that the country's economy is trending in a positive direction but remains at risk due to Covid-19 and its variants.

To that end, the members said the central bank will continue its current favorable monetary policy until the country reaches its price stability target of 2 percent. Interest rates will remain at current levels for the time being, and the members did not rule out additional stimulus if they deemed it necessary.

In contrast, the greenback was lower against the pound, at a 5-day low of 1.3306. The pound-greenback pair had ended yesterday's trading session at 1.3258. Next key support for the greenback is likely located around the 1.35 level.

The greenback fell to a 2-day low of 1.2904 against the loonie, 5-day lows of 0.6780 against the kiwi and 0.7164 against the aussie, from Tuesday's closing values of 1.2913, 0.6764 and 0.7153, respectively. The greenback may face support around 1.26 against the loonie, 0.70 against the kiwi and 0.74 against the aussie.

U.S. GDP data for the third quarter and existing home sales for November will be published in the New York session.

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