"Payrolls will probably be more important than the FOMC statement for the dollar over the week, and another outcome near 200k might finally see the dollar gaining a little upside traction," said Ray Attrill, co-head of forex strategy at NAB.
Moreover, there will be no press conference with Fed Chair Janet Yellen after the April 29-30 meeting, meaning an absence of headlines that would otherwise "inject volatility" into the dollar crosses, said Khoon Goh, senior FX strategist at ANZ. Fed taper is on "auto pilot," Goh said, with $10 billion per meeting and set to complete by October.
Still,markets will be scrutinizing the FOMC statement for any hints on when the Fed may hike rates and dollar bulls will be searching for any confirmation that the economy is turning a corner after an extreme winter that dulled activity.
"U.S. data has been improving and any acknowledgement in the statement will be USD positive," Goh said, adding that the dollar should be stronger this week mainly against emerging market currencies.
Core PCE may surprise
Despite the importance of the payrolls numbers, Greg Gibbs, senior currency strategist at RBS was among many highlighting the PCE Price Index, the Fed's preferred gauge of inflation out on May 1, as crucial in determining rate expectations.
"More important will be the perceptions about the timing of rate hikes in the US, and this will depend more on the evolution of the data, including as usual crucially the payrolls and the PCE deflator," Gibbs said.
Peter Redward of independent research firm Redward Associates Ltd. predicted a "surprise" from the monthly PCE and core PCE deflator this week, giving policymakers some food for thought.
"With the CRB index up 11 percent year-to-date, we are going to see a pick-up in headline inflation figures, which will be uncomfortable for the Fed," Redward said.
Citing consensus views, UBS expects a rise in core Personal Consumption Expenditure prices from 1.1% to 1.2% following stronger than expected CPI and PPI prints for March.
"If March's core PCE print comes out stronger than expected, investors are likely to see less risk of the Fed keeping interest rates on hold for a lengthy period once it ends its asset purchases by the autumn," wrote Mansoor Mohi-uddin, head of foreign exchange strategy at UBS in FX comments emailed to CNBC on Saturday.
"That would give the dollar renewed support as the central bank would become one of the first major monetary authorities to start raising interest rates next year," he added.
Still, dollar bears argue that the greenback will have to mark time before jobs,manufacturing or inflation data triggers any turnaround, and the currency will probably remain on the defensive over the course of the week.
The dollar will be under pressure primarily against the Japanese yen due to fears of an escalation in the Ukraine crisis, feeding demand for safe-haven currencies like the yen and Swiss franc.
In latest developments, pro-Russian rebels paradedEuropean monitors they are holding in eastern Ukraine on Sunday, freeing onebut saying they had no plans to release another seven as the United States andEurope prepared new sanctions against Moscow, Reuters reported.
U.S. President Barack Obama called for the United States and Europe to join forces to impose stronger measures to restrain Moscow. In a move senior U.S. officials said may come as early as Monday, the White House said it would add names of people close to President Vladimir Putin and firms they control to a list of Russians hit by sanctions over Ukraine, and also impose new restrictions on high-tech exports.
"Ukraine could keep the USD from rallying both against the euro (EUR acting as quasi safe haven) and JPY," said Christ Weston, chief market strategist at IG Markets, but added "NFPs (Non-Farm Payrolls) hold upside risks for USD."
Reinforcing the bullish bias of the CNBC survey, latest data from IG Markets shows nearly three-quarters (74 percent) of their more than 501 clients with open positions are betting on a firmer U.S.dollar against the yen.