USD strengthened against other major currencies in the Asian session on Wednesday, rebounding from the nearly three-week lows it hit on the Federal Reserve's “dovish” stance on tapering its monetary stimulus.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, rose 0.14% at 92.76.

USD’s gains also reflected the markets’ reaction to the softening economic data from around the world, including the U.S. and China. The Conference Board reported on Tuesday its U.S. consumer confidence index tumbled 11.3 points to 113.8 in August, the lowest level since February. The Markit/Caixin’s survey revealed today that China's manufacturing PMI slipped into contraction territory at 49.2 in August for the first time since April 2020.

In addition, market participants remained cautious ahead of the U.S. August employment report, which will be released at the end of this week. Progress on employment is crucial for the U.S. central bank. The Fed's Chairman Jerome Powell suggested last week that he would like to assess incoming data on the labor market before committing to a taper timeline. That means the August NFP report could be more consequential than usual.