The USD rallied against its major currency counterparts Wednesday following the release of stronger than expected economic data. The greenback erased overnight losses against the EUR after the release of a better than expected ADP Non Farm Employment report in January while the ISM Non-Manufacturing PMI showed expansion in service sector activity in the world's biggest economy.

The ICE Dollar Index, which tracks the performance of the greenback against a trade-weighted basket of currencies, was at 79.360 from 79.000. the better than expected economic data boosted confidence ahead of the key Non Farm Employment report Friday, renewing expectations that the Federal Reserve will raise interest rates sooner than previously forecast. The EUR/USD was also pressured by revived concerns about the fiscal health of Greece as well as Portugal. The greenback also pushed to a two week high against the Yen.

Markets are now focused on the January Non Farm Payroll Data, due out Friday. The Labor Department is expected to show that the U.S. economy added 20,000 jobs last month, which would be the biggest gain since 2007. Today, the Unemployment Claims are due to be released at 13:30 GMT. This release might prove quite volatile for the USD, particularly if the result contrasts with Friday's expectations.